KBR 2019 Proxy Statement · 4 2019 Proxy Statement U.S. Navy F-35C, CF-01, ﬂying over Ocean...

V I S I O N B E Y O N D I M A G I N AT I O N

Notice of Annual Meeting of Stockholders and Proxy Statement

CHECK OUT OUR 2019 NOTICE OF ANNUAL STOCKHOLDER

MEETING, ONLINE PROXY STATEMENT, ANNUAL REPORT AND SUSTAINABILITY

REPORT AT:

www.kbr.com/proxy

www.proxyvote.com

www.kbr.com/annualreport

www.kbr.com/sustainabilityreport

Notice of Annual Meeting of Stockholders

You are cordially invited to attend KBR’s annual stockholders’ meeting. Below is important information about the meeting,including how you can let your voice be heard through voting. Please review our Proxy Statement, Annual Report andSustainability Report at the websites noted below and read the voting Q&A on page 88.

By Order of the Board of Directors, April 1, 2019

Adam KramerSecretary

DATE AND TIME:

Wednesday, May 15, 2019, 9:00 a.m. Central Daylight Time

LOCATION:

The Texas Room, 601 Jefferson Street, Houston, Texas 77002

AGENDA

The Board of Directors asks that you consider and act upon the following matters:

Elect as directors the eight nominees named in the attached proxy statement.1.

Consider and act upon an advisory vote to approve the named executive officer compensation as described in the2.Compensation Discussion and Analysis herein.

Ratify the appointment of KPMG LLP as the independent registered public accounting firm to audit the consolidated3.financial statements for KBR as of and for the year ending December 31, 2019.

Transact any other business that properly comes before the meeting or any adjournment or postponements of the4.meeting.

These items are fully described in the following pages, which are made a part of this Notice.

RECORD DATE

The Board of Directors has set Friday, March 22, 2019, at the close of business, as the record date for the determination ofstockholders entitled to notice of and to vote at the meeting and at any adjournment or postponement of the meeting.

HOW TO VOTE

STOCKHOLDER OF RECORD(Shares held directly with KBR)

BENEFICIAL OWNERS(Shares held through a broker or bank)

Via the Internet at www.proxyvote.com

Via the Internet at www.proxyvote.com, if your broker or bank participates in the proxy voting program provided by Broadridge Investor Communication Services

Call toll-free (US/ Canada) at 1-800-690-6903

Call toll-free (US/ Canada) at 1-800-690-6903, if your broker or bank participates in the proxy voting program provided by Broadridge Investor Communication Services

Mail your signed proxy card See page 88 for instructions on how to attend

Mail your signed voting instruction form See page 88 for instructions on how to attend

www.kbr.com2019 Proxy Statement4

U.S. Navy F-35C, CF-01, flying over Ocean City, Maryland, on its way back to Naval Air Station Patuxent River after completing testing over the Atlantic Ocean. U.S. Navy photograph by KBR’s in-flight test team photographer, Erik Hildebrandt.

(Photo courtesy of the U.S. Navy)

KBR is the Program Management Consultant for Qatar ’s Expressway Program that provides critical road network links to key areas around the country, including industrial areas, airports, ports, and residential, business and tourism districts. Qatar's Expressway Program has become one of the world's largest transport infrastructure programs and comprises approximately 40 major projects, 900 km of new and upgraded roads, and 348 bridges and underpasses.

2019 Proxy Statement 5

Table of Contents

PROXY SUMMARY 7

General InformationPROXY STATEMENT 16General Information 16

ELECTION OF PROPOSAL NO. 1 -DIRECTORS 17Our Board 17

Nominees for Director — Term Ending 2019 19

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 24

EXECUTIVE OFFICERS 25

Corporate GovernanceCORPORATE GOVERNANCE 30Corporate Governance Materials 30

Role of the Board of Directors 30

Independence Standards 30

Board of Directors Leadership Structure 31

Risk Oversight Role of the Board of Directors 31

Directors’ Meetings and Stockholder Communications with Directors 32

Management Succession Planning 32

The Board of Directors and Standing Committees of Directors 33

Anti-Hedging Policy 37

Code of Ethics 37

Contact the Board 38

COMPENSATION DISCUSSION AND ANALYSIS 39Executive Summary 39

Elements of Compensation 45

Other Compensation Elements 56

Impact of Executive Conduct or a Restatement of Earnings on Compensation (Clawback Policy) 57

Impact of Accounting, Regulatory, and Tax Requirements on Compensation 57

Stock Ownership Guidelines for Officers 58

No Pledging 58

Minimum Holding Period for Restricted Stock Units and Stock Options 58


Conclusion 59

COMPENSATION COMMITTEE REPORT 60

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 60

Executive CompensationEXECUTIVE COMPENSATION 62Summary Compensation 62

Grants of Plan-Based Awards 64

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table 65

Severance and Change-in-Control Agreements 72

No Employment Agreements 74

CEO Pay Ratio 74

DIRECTOR COMPENSATION 76

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 78

RELATED PERSON POLICIES 78

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 78

ADVISORY VOTE TO PROPOSAL NO. 2 -APPROVE NAMED EXECUTIVE OFFICER COMPENSATION 79Executive Compensation 79

Audit MattersAUDIT COMMITTEE REPORT 82

APPROVED PRINCIPAL ACCOUNTANT FEES AND SERVICES 84Pre-Approval Policy 84

RATIFY THE PROPOSAL NO. 3 -APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 85

Additional InformationQUESTIONS AND ANSWERS ABOUT VOTING 88

ADDITIONAL INFORMATION 90Stockholder Proposals for 2019 Annual Meeting and Director Nominations 90

Proxy Solicitation Costs 90

OTHER MATTERS 90

ADDITIONAL INFORMATION AVAILABLE 90Non-GAAP Reconciliation: EBITDA and Adjusted EPS 91


KBR and its joint venture partners provided engineering, procurement, construction, pre-commissioning, commissioning, start-up and operations services for Yemen’s first liquefied natural gas ("LNG") plant located in the port of Balhaf on its southern coast. The challenging location required careful consideration of safety, planning and execution strategy.

Our Extravehicular Activity Space Operat ions Contract technician completes the inspection and testing on a Short Extravehicular Mobility Unit as part of space flight preparations. The Extravehicular Mobility Unit is an independent anthropomorphic spacesuit that provides environmental protection, mobility, life support, and communications for astronauts performing extravehicular activity in Earth orbit.


Proxy Summary

Proxy SummaryThis summary highlights information contained elsewhere in this proxy statement. For more information about these topics,we encourage you to review the complete proxy statement prior to voting.

Proposals Requiring Your Vote

1 Election of Directors to the Board BoardRecommends FOR

Each NomineeP. 17

2 Advisory Vote to Approve the Named Executive Officer Compensation BoardRecommends FOR P. 79

3 Ratify KPMG LLP as the Independent Registered Public Accounting Firm BoardRecommends FOR P. 85

Governance highlightsWe are committed to good corporate governance and to transparent communication with our stockholders and other stakeholders,which we believe is essential for the effectiveness of a dynamic corporate governance framework and for KBR’s long-term success.

AccountableAnnual director elections with majority voting ●standardsAnnual Board governance review including ●investor reviews and feedback

Periodic independent director meetings with ●investors

Downward discretion applied to the: (a) safety ●performance metrics of the 2016, 2017 and 2018 short-term incentive plans and (b) payout of the 2014 long-term incentive performance cash award with the performance period ending in 2016, resulting in a zero payout

Independent and engagedIndependent Chairman of the Board●Significant knowledge of KBR’s industry and market ●including government services

Annual Board visits to KBR businesses or project sites●Annual assessment of Board leadership structure●

22independent Board committee meetings

8executive sessions held in 2018 without management

present

Refreshed

+1director over the past

3 years

-3directors

over the past 3 years

50%rotation of all Board

committee memberships and chairmen over the past 3 years


Proxy Summary

Business Highlights

Robust Strategic Vision Leads to Solid Growth PotentialIn the past three years, KBR focused on delivering world-class progress on our strategy to grow our business by prioritizingservice to our customers and winning the right work despite the opportunities to deliver long-term customer value and achievechallenging macroeconomic climate. Our commitment to success across our markets. We invested heavily in expandingposition KBR for growth as the markets across our segments and diversifying our Government Services business and realizedcontinued to strengthen and as demand grew in 2018 resulted in significant synergies that support our strategy. We havean upward trajectory of our business. For the second year we exceeded our Earnings Per Share (“EPS”) targets and marginsdelivered strong operational performance, demonstrating our and realized 18% revenue growth. Some of our achievements incommitment to our robust strategic vision. We made significant 2018 included:

Grow Business1We delivered organic growth of 17% and ●10% in our Government Services and Technology businesses respectively. We created a solid foundation for growth, organically and due to our acquisitions, increasing our revenue by 18% and backlog by 28% from the previous year, the majority of which is associated with long-term, reimbursable, private finance initiative contracts with a lower risk profile and more predictable cash flows; and

We completed the acquisitions of Stinger ●Ghaffarian Technologies, Inc. (“SGT”) and our partner’s interest in Aspire Defence Holdings Limited (“Aspire Defence”). SGT solidifies our leadership position in human space exploration, with NASA’s Human Spaceflight program being one of several NASA programs we deliver. Aspire Defence increases our opportunities in both civil and military space. These major acquisitions, together with those from 2016, have been an important accelerator to our growth, resulting in increased revenues and value for our stakeholders.

Win the Right 2Work

We were awarded a task order to provide ●cybersecurity services for the Defense Health Agency to secure healthcare information of the U.S. Air Force, Army and Navy and their families;

The U.S. Air Force Institute of Technology ●Graduate School of Engineering and Management awarded us a task order to provide defense-focused graduate and professional continuing education;

We were selected by NASA as one of 13 ●companies to study the future of commercial enterprise in low-Earth orbit, including long-range opportunities for the International Space Station;

We were awarded a seat on the ●Department of Defense Information Analysis Center Research and Development contract;

Our Technology business expanded in ●the Middle East and Asia, with several projects ranging from ammonia and nitric acid plants revamps to licensing, engineering and proprietary equipment supply contracts, and by increasing our scope offerings. We are building our first K-SAATTM plants in China and won our first order in the U.S.; and

In our Hydrocarbons Services business, ●we continued our focus on opportunities for midstream LNG expansion. We secured a contract from DuPont Safety and Construction to expand capacity for the manufacture of Tyvek® nonwoven materials.

Return to 3Stockholders

1-year total stockholder return (“TSR”)

#2in our TSR peer group

TSR Peer Group(in order of TSR ranking)

- Jacobs Engineering Group Inc.

- KBR- Quanta Services, Inc.

- EMCOR Group, Inc.

- AECOM Technology Corporation

- TechnipFMC plc

- Fluor Corporation

- Chiyoda Corporation

- McDermott International, Inc.

“Our TSR Peer Group is used to determine KBR's TSR performance ranking among its peers during the performance periods of our KBR Long-Term Performance Cash Awards."


Proxy Summary


Proxy Summary

Financial Highlights

Revenue and EBITDA growth fueled by industry-leading organicgrowth in Government Services and Technology busineses and acquisitions by Government Services business

Long-term backlog with qualitygrowth opportunity

BACKLOG

20182017

$13,497MM$10,570MM

28%

EBITDA*

20182017

REVENUE

2017 2018

18%

$4,913MM$504MM

$320MM

58%

* EBITDA is defined as earnings before interest income/expense, income taxes, other non-operating income/expense depreciation and amortization.

* Reconciliation of EBITDA to net income is provided at the end of the Proxy Statement.

$4,171MM

EPS and Safety Performance

$44MMDividends paid

out in 2018

1-YEAR TSR RANKING AMONG TSR PEER GROUP

8th 2nd1st

2016* 2017* 2018**

* TSR Ranking Among TSR Peer Group (of 10).** TSR Ranking Among TSR Peer Group (of 9).

KBR EARNINGS PER SHARE KBR TOTAL RECORDABLE INCIDENT RATE (per 200,000 work hours)

2014 201720162015 2018

0.418

0.2790.237 0.215 0.191

$1.53*adjusted

2016

-$0.34adjusted

20182017

$1.49**adjusted

** Reconciliation of adjusted EPS to EPS is provided at the end of the Proxy Statement.

$3.06

$1.99*

-$0.43

* While our 2018 EPS decreased from 2017 due to material non-cash benefits related to thereassessment of a valuation allowance upon achieving cumulative pretax income, and the 2017 Tax Reform that were accounted for in 2017, our adjusted EPS excluding these non-cash benefits and other expenses increased from 2017.

Pay for Performance Philosophy Our compensation program links pay to performance to align our focused on growth and strategic expansion while reducing costsenior executives’ interests with that of our stockholders. and increasing efficiencies and cash flow performance. In orderConsistent with our business strategy, we ensured our senior to achieve this, we set rigorous targets for 2018 for both KBRexecutives’ individual Key Performance Indicators (“KPIs”) short-term and long-term incentive plans.


Proxy Summary

The average short-term incentive award for 2018 that wasearned by our Named Executive Officers (“NEOs”) excluding ourCEO was 137.4% of target, a decrease from 150.6% in 2017.Our CEO’s short-term incentive award earned 163.3% of target,a decrease from 182.6% in 2017. The decrease in our NEOs'2018 short-term incentive award payouts was mainly due tonegative discretion applied by the Compensation Committee toour safety, cash flow, and several NEOs' individual metrics. Weapplied 10% negative discretion to our safety metric in 2018 dueto a fatal employee incident, which resulted in a zero payout forour safety metric under the 2018 Short-Term Incentive Plan.Furthermore, we applied 6.2% negative discretion to ouroperating cash flow metric in 2018 to be fiscally conservativebecause of KBR's acquisition of SGT in April 2018. In addition,our operating cash flow metric earned 50% less than in 2017,which was primarily attributable to the 2017 operating cash flowmetric achieving maximum earnings of 200% as a result of thesuccessful resolution of our longstanding dispute with PEMEX in2017.

the three-year performance period ending onDecember 31, 2018, earned zero, a decline from 69% in 2017.The remaining 50% of the KBR Long-Term Performance CashAwards that are based on our Job Income Sold (“JIS”) metric,which correlates more with revenue and operating income,earned 179% over the same three-year performance period, adecline from 186% in 2017. At the beginning of the year, ourCompensation Committee established a rigorous target JIS for2018 of $585MM, an increase of 50% from 2017 and 71% from2016, to drive growth and expansion. Due to our strategic shift,82% of our backlog represents lower risk, long-term governmentcontracts combined with private financing initiatives. The JISpayout demonstrates our commitment and efforts in the pastthree years to win the right work and deliver on our strategy toposition KBR for long-term success.

While we achieved significant growth and increased ourrevenues and operating income in 2018, our three-year TSR fromJanuary 1, 2016, to December 31, 2018, was below threshold(discussed in the Compensation Discussion and Analysis of thisproxy statement under the section titled “2018 Long-TermPerformance Cash Award”). Consequently, the 50% TSR portionof the KBR Long-Term Performance Cash Awards payable for

In 2018, our CEO’s base salary was increased for the first timesince he was appointed in 2014, to reward him for thedemonstrated success of his strategic decisions to align ourbusinesses, focus on KBR’s strengths and drive growth acrossour core business segments. Our NEOs received base salaryincreases as well, which were generally in line with what ourother employees received, except for Mr. Mackey, who receivedan increase based upon his increased responsibilities in 2018.Our NEOs' salaries are further discussed in the CompensationDiscussion & Analysis of this proxy statement under the sectiontitled “Base Salary.”

Our CEO’s compensation and the short-term and long-term incentive compensation of our NEOs are illustrated below:

No Significant Changes made to Compensation Programs in 2018In 2017, the Compensation Committee made changes to our compensation program to further emphasize the link between pay andCompany performance. These changes related to the short-term incentive plan and included the increase of our EPS metric weightingfrom 25% to 40%, decrease of the individual Key Performance Indicators (“KPIs”) weighting from 45% to 30%, addition of morefinancially measurable metrics to the KPIs, and CEO's KPIs being based solely on earnings before interest, tax, depreciation andamortization (“EBITDA”) targets. The Compensation Committee believed that the changes made in 2017 strongly reflect our pay forperformance strategy. Accordingly, no significant changes were made to our compensation program for 2018.


Proxy Summary

Zero Harm — Historical Two Months Zero Harm RecordSince the inception of Zero Harm in 2014, one of our announce that KBR completed the months of February andfundamental beliefs is that Zero Harm is achievable. KBR’s December 2018 without a single recordable injury globally.safety program incorporates three dynamic components: Zero This milestone has been achieved through an all-day, every-dayHarm, 24/7 and Courage to Care. Our regional and business approach at work and at home, which has resulted in a culturesegment leadership hosts at a minimum biweekly of truly caring for not only ourselves but also others in ateleconferences to discuss incidents and prevention measures, transparent, interdependent work environment.which are shared globally. The outcome of these meetings ispresented in the Regional and Global Incident Review Boardsessions. The inclusion of safety results in our short-termincentive plan and exercising downward discretion in thepayout for a fatal employee incident during the yearemphasizes the importance of safety for us. On our annualZero Harm Day, employees at all KBR offices and sites globallyrecognize improvements in our safety performance and reflecton the importance of being an incident-free organization withdemonstrations of personal and workplace safety practices.Since the Zero Harm program was implemented, safetyincidents have declined by 54%, and we are proud to

Our CEO was recently named to the prestigious 2019 list of“CEOs Who 'Get It'” by the National Safety Council forintroducing, building and cultivating a pervasive Zero Harmculture at KBR in his four and a half year tenure as CEO. Mr.Bradie was one of eight CEOs from national and internationalorganizations to receive the annual recognition presented toleaders who go above and beyond to protect employees both onand off the job. The National Safety Council recognizes honoreesthat have built a safety strategy using four key components:leadership and employee engagement, safety managementsolutions, risk reduction and performance measurement.

KBR employees attending our third annual global Zero Harm Day are posing with a used astronaut suit and safety gear to learn more about safety in space.


Proxy Summary

ASPIRE — Executive Leadership Kicks off “KBR Inc.lusion”KBR’s ASPIRE group provides our employees with a platform to October 11, 2018, with a joint kick-off event for our SGT andcultivate women and minority leaders and promote inclusion and KBRwyle employees, welcoming them to KBR and enablingdiversity through a collaborative community for the benefit of all them to learn about our efforts to build an inclusive and diverseemployees and KBR. At KBR we value and respect our people, work environment for our employees. and we emphasize development of each person to reach his orher full potential. ASPIRE promotes this behavior through severalinteractive sessions led by leadership, brown bag sessions,webinars, networking events, panel discussions and book clubsessions. Each event hosts influential leaders from KBR andfrom the community sharing their perspective on genderdiversity and equality. A periodic newsletter with inspirationalleadership insights and upcoming events is shared withemployees. We launched a new ASPIRE chapter in Maryland on

In celebration of International Women’s Day on March 8, 2019,our executive leadership team kicked off “KBR Inc.lusion,” aninitiative to inspire practicing inclusive behaviors, and growing aworkforce and culture to support KBR’s strategic goals. OurCEO, several NEOs, and other senior executives took part in apanel discussion on how KBR is addressing changingdemographics in the competition for talent.


Proxy Summary

Sustainability — Invest in Our Future · Invest in Change · Invest in Our WorldAs we strongly believe that our growth should not be at the engineering solution to one of the greatest environmentalexpense of the people and our planet, we have embarked on an challenges: the elimination of plastics from the ocean. Using ourinspiring journey to contribute more meaningfully to global expertise and knowledge, our engineers will mentor and guideprogress by 2030. In 2018, we made an assessment of our the next generation, networking with local and global schoolsstakeholders, their sustainability concerns and our internal across KBR’s global footprint. Using our talented workforce wemanagement approach to address these concerns and help strive to encourage, engage and enlighten future generationspeople, communities and the planet advance. In September through engineering to explore dynamic world changing2018, we launched KBR’s One Ocean initiative, where we will solutions.be collaborating with local and global schools to find an


Part One

General Information

Proposal No. 1 - Election of Directors 17Our Board 17

Nominees for Director — Term Ending 2019 19

Security Ownership of Certain Beneficial Owners and Management 24

Executive Officers 25


Corporate Governance

Proxy Statement

Proxy Statement

General InformationThe accompanying proxy is solicited by the Board of Directors ofKBR, Inc. (“KBR,” the “Company,” “we” or “us”). By executingand returning the enclosed proxy or by following the enclosedvoting instructions, you authorize the persons named in theproxy to represent you and vote your shares on the mattersdescribed in the Notice of Annual Meeting of Stockholders.

Subject to space availability, all stockholders as of the recorddate, or their duly appointed proxies, may attend the meeting.Admission to the meeting will be on a first-come, first-servedbasis and no guests will be admitted. Registration will begin at8:00 a.m. CT, and the meeting will begin at 9:00 a.m CT. Pleasenote that you may be asked to present valid pictureidentification, such as a driver’s license or passport, when youcheck in at the registration desk.

If you hold your shares in “street name” (that is, through abroker or other nominee), you are required to bring a copy of abrokerage statement or voting instruction form reflecting yourstock ownership as of the record date and will need to obtain alegal proxy from the broker or other nominee holding your sharesto vote at the Annual Meeting of Stockholders.

No cameras, recording equipment, electronic devices, largebags, briefcases or packages will be permitted in themeeting.

If you attend the meeting, you may vote in person. If you are notpresent, your shares can be voted only if you have followed theinstructions for voting via the Internet or by telephone orreturned a properly executed proxy, and in these cases, yourshares will be voted as you specify. If no specification is made,the shares will be voted in accordance with therecommendations of the Board of Directors. You may revoke theauthorization given in your proxy at any time before the sharesare voted at the meeting.

The record date for determination of stockholders entitled tovote at the meeting is Friday, March 22, 2019. KBR’s commonstock, par value $0.001, is the only class of capital stock that isoutstanding. As of March 22, 2019, there were 141,448,558shares of common stock outstanding. Each of the outstandingshares of common stock is entitled to one vote on each mattersubmitted to the stockholders for a vote at the meeting. Acomplete list of stockholders entitled to vote will be kept at ouroffices at the address specified below for ten days prior to, andwill be available at the meeting.

which a holder has elected to abstain on a matter will count forpurposes of determining the presence of a quorum and will havethe effect of a vote against the matter.

Votes cast by proxy or in person at the meeting will be countedby the persons appointed by us to act as election inspectors forthe meeting. Except as set forth below, the affirmative vote ofthe majority of shares present in person or represented by proxyat the meeting and entitled to vote on the subject matter will bethe act of the stockholders. Except as set forth below, shares for

Directors are elected by a majority of votes cast (the number ofshares voted “for” a candidate must exceed the number ofshares voted “against” the candidate). Shares present but notvoting on the election of directors will be disregarded, except forquorum purposes, and will have no legal effect.

The election inspectors will treat shares held in street name thatcannot be voted by a broker on specific matters in the absenceof instructions from the beneficial owner of the shares, knownas broker non-vote shares, as shares that are present andentitled to vote for purposes of determining the presence of aquorum. In determining the outcome of any matter for which thebroker does not have discretionary authority to vote, however,those shares will not have any effect on that matter. Thoseshares may be entitled to vote on other matters for whichbrokers may exercise their own discretion.

The proxy solicitor, the election inspectors, and the tabulators ofall proxies, ballots, and voting tabulations that identifystockholders are independent and are not employees of KBR.

On or about April 1, 2019, we will mail our stockholders a Noticeof Internet Availability of Proxy Materials (“Notice”). The Noticeincludes instructions on how to access the proxy statement, theform of proxy and vote online at www.proxyvote.com.Stockholders who do not receive the Notice will continue toreceive either a paper or an electronic copy of our proxymaterials, which will be sent on or about April 1, 2019. For moreinformation, see “Questions and Answers About Voting” onpage 88. This proxy statement, the form of proxy, and votinginstructions are being made available to stockholders on or aboutApril 1, 2019, at www.proxyvote.com. You may also request aprinted copy of this proxy statement and the form of proxy byany of the following methods: (a) telephone at 1-800-579-1639;(b) Internet at www.proxyvote.com; or (c) e-mail [email protected]. Our Annual Report toStockholders, including financial statements, for the fiscal yearended December 31, 2018, is being made available at the sametime and by the same methods. The Annual Report is not to beconsidered as a part of the proxy solicitation material or ashaving been incorporated by reference.

Our principal executive office is located at 601 Jefferson Street,Suite 3400, Houston, Texas 77002 and our website address iswww.kbr.com. Information contained on our website, includinginformation referred to in this proxy statement, is not to beconsidered as part of the proxy solicitation material and is notincorporated into this proxy statement.



Proposal No. 1 - Election of Directors

Election of DirectorsProposal No. 1 -At our 2019 Annual Meeting of Stockholders, eight directors are annual meeting of stockholders following his or her seventy-fifthto be elected to hold office until the 2020 Annual Meeting of birthday.Stockholders. All directors are elected annually, with eachnominee standing for election to a one-year term. The membersof our Board of Directors hold office until their successors areelected and qualified or until their earlier resignation or removal.The size of our Board of Directors is currently set at ninemembers. Mr. Loren K. Carroll will retire from our Board ofDirectors on May 15, 2019, in accordance with the Board'sretirement policy. It is the policy of our Board of Directors thateach non-executive director will retire from the Board by the

Each nominee has indicated his or her willingness to serve, ifelected. If any of the nominees declines to serve or becomesunavailable for any reason, or if a vacancy occurs before theelection, the proxies may be voted for such substitute nomineeas we may designate. We have no reason to believe that any ofthe nominees will be unable to serve if elected. If a quorum ispresent, the nominees for director receiving the majority ofvotes will be elected directors.

Our BoardA top priority of the Board and the Nominating and Corporate Governance Committee is ensuring that the Board of Directors iscomposed of directors who bring a variety of skills relevant to our business, provide expertise that is useful to KBR andcomplementary to the background and experience of other Board members, and effectively represent the long-term interests of ourstockholders. Below is a summary of our Board of Directors qualifications.




For additional information regarding the qualifications theNominating and Corporate Governance Committee and theBoard consider in the nomination process, see “CorporateGovernance — Nominating and Corporate GovernanceCommittee — Qualifications of Directors.”

The Board of Directors recommends that you vote FOR the election of all the director nominees listed below. Properly dated and signed proxies, and proxies properly submitted over the Internet and by telephone, will be so voted unless stockholders specify otherwise.

Directors are elected by a majority of votes cast (the number ofshares voted “For” a candidate must exceed the number ofshares voted “Against” the candidate). Shares present but notvoting on the election of directors will be disregarded, except forquorum purposes, and will have no effect on the election ofdirectors.

The following biographical information is furnished with respectto each of the director nominees for election at the meeting. Theinformation includes age as of March 22, 2019, present position,if any, with KBR, period served as director, and other businessexperience during at least the past five years.

Nominees for Director — Term Ending 2019

MARK E. BALDWIN Key Qualifications and Skills:

Age: 65

Director since: October 2014

Board Committees: Audit Committee (Chair) and Health, Safety, Security, Environment and Social ResponsibilityCommittee

Other Public Company Boards: Nine Energy Service, Inc. (Audit Chair) and TETRA Technologies, Inc. (Audit Chair)

Prior Business Experience EducationExecutive Vice President and Chief Financial Officer of ●Dresser-Rand Group, Inc.Executive Vice President, Chief Financial Officer, and ●Treasurer of Veritas DGC Inc.Operating Partner at First Reserve Corporation●Executive Vice President and Chief Financial Officer for ●NextiraOneChairman of the Board and Chief Executive Officer for ●Pentacon Inc.Variety of finance and operations positions with Keystone ●International Inc., including Treasurer, Chief Financial Officer, and President of the Industrial Valves and Controls Group

B.S. (Mechanical Engineering), Duke University●M.B.A., Tulane University●Graduate of the Stanford Executive Program●

JAMES R. BLACKWELL Key Qualifications and Skills:

Age: 60

Director since: August 2014

Board Committees: Compensation Committee and Nominating and Corporate Governance Committee

Other Public Company Boards: None

Current Memberships: Harbour Energy Ltd. (Director)

Previous Memberships: Center for Strategic and International Studies (“CSIS”) U.S.-Association of SoutheastAsian Nations Strategy Commission (Commissioner); CSIS U.S.-China Policy Advisory Roundtable (Member);National Action Council for Minorities in Engineering, Inc. (Director); National Bureau of Asian Research (Director);and Saint Mary’s College of California (Trustee)

Prior Business Experience EducationExecutive Vice President, Technology and Services for ●ChevronPresident, Chevron Asia Pacific Exploration and ●Production CompanyVarious positions of increasing responsibility following ●start of career as an offshore roustabout for Gulf Oil

B.S. (Biology and Environmental Technology), ●University of Southern MississippiM.S. (Petroleum Engineering), Tulane University●Graduate of the Columbia Senior Executive ●Program

Finance Leadership Risk Management Industry / Market Government Global




STUART J. B. BRADIE Key Qualifications and Skills:

Age: 52

Director since: October 2014

President and Chief Executive Officer for KBR, Inc. since: June 2014

Board Committees: None (the CEO may not serve on any committees of the Board)


Prior Business Experience EducationGroup Managing Director — Operations and Delivery for ●WorleyParsonsManaging Director across Europe, Africa, Asia and the ●Middle East for WorleyParsonsManaging Director for PT Kvaerner Indonesia●Country Manager for Kvaerner Philippines●Global experience across over 40 countries in the ●hydrocarbons, mining and chemicals, power and infrastructure sectors

B.S. (Mechanical Engineering), Aberdeen University●M.B.A., Edinburgh Business School, Heriot-Watt ●University

GENERAL LESTER L. LYLES, USAF (RET.) Key Qualifications and Skills:

Age: 72

Director since: November 2007

Board Committees: Nominating and Corporate Governance Committee (Chair) and Compensation Committee

Other Public Company Boards: General Dynamics Corporation (Audit)

Current Memberships: Battelle Memorial Institute (Director); NASA Advisory Council (Member); and UnitedServices Automobile Association (Chair)

Previous Memberships: Defense Science Board in the Pentagon (Member); International Security Advisory Boardat the U.S. Department of State (Member); Precision Castparts Corp. (Director); and President’s IntelligenceAdvisory Board in the White House (Member)

Prior Business Experience EducationIndependent Consultant (current)●Retired Four-Star General of the U.S. Air Force●Commander of the U.S. Air Force Materiel Command●Vice Chief of Staff of the Headquarters of the U.S. Air ●ForceDirector of the Ballistic Missile Defense Organization●Commander of the Space and Missile Systems Center●

B.S. (Mechanical Engineering), Howard University●M.S. (Mechanical and Nuclear Engineering), Air ●Force Institute of Technology Program, New Mexico State UniversityDefense Systems Management College, Fort ●Belvoir, VirginiaArmed Forces Staff College, Norfolk, Virginia●National War College, Fort Lesley J. McNair, ●Washington, D.C.National and International Security Management ●Course at Harvard UniversityHonorary Doctor of Laws degrees from New ●Mexico State University and Urbana UniversityInducted into the National Academy of Engineering●





GENERAL WENDY M. MASIELLO, USAF (RET.) Key Qualifications and Skills:

Age: 60

Director since: August 2017

Board Committees: Audit Committee and Health, Safety, Security, Environment and Social ResponsibilityCommittee


Current Memberships: EURPAC Services, Inc. (Director); National Contract Management Association (Board ofAdvisors); Public Spend Forum (Board of Advisors); and Rawls College, Texas Tech University (Advisory Council)

Prior Business Experience EducationIndependent Consultant (current)●Retired Three-Star General of the U.S. Air Force●Director of the Defense Contract Management Agency●Deputy Assistant Secretary (Contracting), Office of the ●Assistant Secretary of the Air Force for AcquisitionProgram Executive Officer for the Air Force’s ●$65 billion Service Acquisition portfolioDeployment to Iraq to lead contracting support for military ●forces in Iraq and Afghanistan

B.B.A. (Marketing), Texas Tech University●M.S. (Logistics Management), Air Force Institute of ●TechnologyDefense Systems Management College, Fort ●Belvoir, VirginiaM.S. (National Resource Strategy), Industrial ●College of the Armed Forces, Fort Lesley J. McNair, Washington, D.C.Senior Acquisition Course, Industrial College of the ●Armed Forces, Fort Lesley J. McNair, Washington, D.C.Joint and Combined Warfighting School, Joint ●Forces Staff College, Norfolk, VirginiaHarvard Kennedy School’s Senior Managers in ●Government

JACK B. MOORE Key Qualifications and Skills:

Age: 65

Director since: January 2012

Board Committees: Compensation Committee (Chair) and Nominating and Corporate Governance Committee

Other Public Company Boards: Occidental Petroleum Corporation; ProPetro Holding Corp.; and Rowan Companies plc

Current Memberships: MAM (Director); United Way of Greater Houston (Executive Committee); and University ofHouston System Board of Regents (Member)

Previous Memberships: American Petroleum Institute (Director); Cameron International Corporation (Chair); andUniversity of Houston’s Board of Visitors (Director)

Prior Business Experience EducationChairman, President and Chief Executive Officer for ●Cameron International CorporationPresident and Chief Operating Officer for Cameron ●International CorporationPresident, Western Hemisphere of Drilling & Production ●Systems group for Cameron International CorporationVice President and General Manager, Western ●Hemisphere of Drilling & Production Systems group for Cameron International CorporationVarious management positions at Baker Hughes ●Incorporated

B.B.A., University of Houston●Graduate of the Advanced Management Program at ●Harvard Business School





ANN D. PICKARD Key Qualifications and Skills:

Age: 63

Director since: December 2015

Board Committees: Health, Safety, Security, Environment and Social Responsibility Committee (Chair) and AuditCommittee

Other Public Company Boards: Woodside Petroleum Ltd. (Sustainability Chair)

Current Memberships: The University of Wyoming Foundation (Budget/Audit) and Chief Executive Women (Member)

Previous Memberships: Advisory Council of the Eurasia Foundation (Member); Catalyst (Board of Advisors); GlobalAgenda Council on the Arctic for the World Economic Forum (Member); and Westpac Banking Corporation (Director)

Prior Business Experience EducationExecutive Vice President, Arctic for Royal Dutch Shell plc●Executive Vice President and Country Chair, Australia, for ●Royal Dutch Shell plcRegional Executive Vice President, Sub Saharan Africa for ●Royal Dutch Shell plcDirector, Global Businesses and Strategy and a member ●of the Shell Gas & Power Executive Committee for Royal Dutch Shell plc11-year tenure with Mobil prior to its merger with Exxon●Significant business experience throughout South ●America, Australia, the countries of the former Soviet Union, the Middle East, and Africa

B.A., University of California San Diego●M.A., University of Pennsylvania●

UMBERTO DELLA SALA Key Qualifications and Skills:

Age: 70

Director since: January 2015

Board Committees: Compensation Committee and Health, Safety, Security, Environment and Social ResponsibilityCommittee

Other Public Company Boards: Trevi Finanziaria Industriale SPA

Current Memberships: FSI SPA (Industrial Partner); and Kedrion SPA (Director)

Previous Memberships: Ansaldo Energia SPA (Chair and Director); Foster Wheeler AG (Director); and StorkTechnical Services (Supervisory Board)

Prior Business Experience EducationPresident and Chief Operating Officer for Foster Wheeler AG●Interim Chief Executive Officer for Foster Wheeler AG●Various positions of increasing responsibility following ●start of career as process engineer of Foster Wheeler’s environmental division

Laurea in Chemical Engineering from Politecnico di ●Milano

The Following Director with a Term Ending in 2019 will Not Stand for Re-Election Due to the Board’s Retirement Policy

LOREN K. CARROLL Key Qualifications and Skills:

Age: 75

Director since: April 2007

Chairman of the Board

Board Committees: Audit Committee


Current Memberships: Petroleum Equipment Suppliers' Association (Former Chair) and President's LeadershipCouncil, Brigham Young University (Member)

Previous Memberships: American Petroleum Institute; CGG (Audit); Dean's Business Advisory Council, CaliforniaState University at Long Beach; Forest Oil Corporation (NCG Chair and Compensation); Independent PetroleumAssociation of America; and Institute of Management Accountants (Chair)

Prior Business Experience EducationIndependent Consultant and Business Advisor (current)●President and Chief Executive Officer of M-I SWACO●Executive Vice President and Chief Financial Officer of ●Smith International, Inc.Managing Partner with Arthur Andersen & Co.●

B.S. (Accounting), California State University at ●Long Beach





The Milky Way’s relatively close neighbor, the Large Magellanic Cloud, captured by the Hubble Space Telescope. KBR has supported the Hubble Space Telescope program since the operations and engineering program started in the early 1980s at the NASA Goddard Space Flight Center.

(Photo courtesy of NASA)

KBR’s Board member Ann Pickard, pictured on the right, visiting our team at the U.S. Naval Support Facility Camp Lemonnier in Djibouti on Zero Harm Day to familiarize herself with safety measurements at the project site.



Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners and Management The table below sets forth certain information, as of Schedule 13G or 13D or amendment thereto filed by each suchMarch 15, 2019, regarding the beneficial ownership of KBR’s person with the Securities and Exchange Commission (thecommon stock by persons known by KBR to beneficially own “SEC”), except as otherwise known to KBR. To our knowledge,more than five percent of its outstanding common stock, each except as otherwise noted in the footnotes to this table or asdirector or nominee, each of the named executive officers provided by applicable community property laws, each individualreferenced in the Summary Compensation Table contained in has sole voting and investment power with respect to the sharesthis Proxy Statement, and all directors and executive officers as of common stock listed in the second column below asa group. Information regarding five percent stockholders in the beneficially owned by the individual.table and footnotes is based on the most recent Statement on

Name and Address of Beneficial Owner(1)

Shares of KBR Common Stock Beneficially Owned

Number of Shares(2) Percentage of Class

BlackRock, Inc.(3)

55 East 52nd Street, New York City, New York 1005516,142,470 11.5%

The Vanguard Group(4)

100 Vanguard Boulevard, Malvern, Pennsylvania 1935512,890,634 9.15%

Frontier Capital Management Co., LLC.(5)

99 Summer Street, Boston, Massachusetts 021107,163,208 5.07%

Stuart J. B. Bradie(6)(7) 412,189 *

J. Jay Ibrahim(6)(7) 64,662 *

Ian J. Mackey(6)(7) 60,675 *

Farhan Mujib(6)(7) 177,625 *

Mark W. Sopp(6)(7) 40,016 *

Mark E. Baldwin(6)(7) 37,343 *

James R. Blackwell(6)(7) 36,754 *

Loren K. Carroll(6)(7) 62,038 *

Lester L. Lyles(6)(7) 52,691 *

Wendy M. Masiello(6)(7) 14,601 *

Jack B. Moore(6)(7) 43,057 *

Ann D. Pickard(6)(7) 29,824 *

Umberto della Sala(6)(7) 31,565 *

ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (18 PERSONS)(6)(7)(8)

1,298,025 *

Less than one percent (1%).*The address of each of the named executive officers and directors is c/o KBR, Inc., 601 Jefferson Street, Suite 3400, Houston, Texas 77002.(1)Beneficial ownership means the sole or shared power to vote, or to direct the voting of, shares of KBR common stock, or investment power with(2)respect to KBR common stock, or any combination of the foregoing. Each director and executive officer and the directors and executive officers asa group beneficially own less than 1% of the outstanding shares of KBR common stock.Based solely on a Schedule 13G filed February 11, 2019, BlackRock, Inc. is deemed to be the beneficial owner of 16,142,470 shares as a result of(3)being a parent holding company or control person in accordance with §240.13d-1(b)(1)(ii)(G).Based solely on a Schedule 13G filed February 11, 2019, The Vanguard Group is deemed to be the beneficial owner of 12,890,634 shares as a(4)result of being an investment adviser in accordance with §240.13d-1(b)(1)(ii)(E).Based solely on a Schedule 13G filed February 11, 2019, Frontier Capital Management Co., LLC. is deemed to be the beneficial owner of 7,163,208(5)shares as a result of being an investment advisor in accordance with §240.13d-1(b)(1)(ii)(E).Includes the following shares of restricted stock and/or restricted stock units that have vested or will vest on or before May 14, 2019: Mr. Bradie,(6)289,013; Mr. Ibrahim, 42,472; Mr. Mackey, 36,039; Mr. Mujib, 89,427; Mr. Sopp, 25,016; Mr. Baldwin, 37,343; Mr. Blackwell, 36,754; Mr. Carroll,62,038; General Lyles, 52,691 (13,361 of which were deferred into the nonqualified elective deferral plan for non-executive directors);General Masiello, 14,601; Mr. Moore, 43,057; Ms. Pickard, 29,824; Mr. della Sala, 31,565; and all executive officers as a group, 327,558. Includesthe following shares that may be acquired upon the exercise of options that are exercisable or will become exercisable on or before May 14, 2019:Mr. Bradie, 123,176; Mr. Ibrahim, 22,190; Mr. Mackey, 24,636; Mr. Mujib, 88,198; and all executive officers as a group, 235,405. Includes 15,000shares of common stock purchased by Mr. Sopp on March 7, 2017, and March 8, 2017.Does not include the following shares of restricted stock units as to which the holder has no voting power and no investment power, but which convert to(7)common stock on a 1-to-1 ratio upon vesting, which for some restricted stock units requires that certain performance measures be met: Mr. Bradie,245,288; Mr. Ibrahim, 32,709; Mr. Mackey, 38,482; Mr. Mujib, 53,872; Mr. Sopp, 49,344; and all executive officers and directors as a group, 642,420.All directors and executive officers as a group refers to the current 9 directors (General Masiello, Ms. Pickard, General Lyles, and Messrs. Baldwin,(8)Blackwell, Bradie, Carroll, Moore, and della Sala) and the current 9 executive officers, excluding Mr. Bradie (Ms. Akerson and Messrs. Bright,Carney, Conlon, Derbyshire, Ibrahim, Mackey, Mujib, and Sopp).



Executive Officers

Executive Officers The following biographical information is furnished with respect to each of KBR’s executive officers. The information includes age asof March 22, 2019, present position, KBR employment history, and other business experience.

EILEEN G. AKERSON

Age: 53

Joined KBR in: 1999

Executive Vice President and General Counsel

Current Position since: November 2014

Prior Business Experience EducationKBR Senior Vice President, Commercial responsible ●for project commercial management and oversight of the review and approval process for significant transactions and joint venture relationshipsKBR Vice President — Legal & Chief Counsel ●responsible for managing the legal functions for the Hydrocarbons Business GroupKBR advisor and counselor to senior management on ●company policies affecting ethics and compliance mattersAttorney for Spriggs & Hollingsworth in Washington ●D.C.

B.A., Catholic University of America●J.D., Catholic University of America Columbus School ●of LawMember of the bars of Texas, Connecticut and the ●District of Columbia

W. BYRON BRIGHT, JR.

Age: 45

Joined KBR in: 2010

President, KBR Government Services U.S.

Current Position since: May 2018

Prior Business Experience EducationKBR President, KBRwyle●KBR Senior Vice President of Operations for ●U.S. Government ServicesKBR Vice President of Business Development for ●U.S. Government ServicesSupported the government services business at ●Jacobs Engineering Group Inc.Officer in the U.S. Air Force primarily working in the ●Developmental Test and Engineering career field supporting weapons development and rotary wing aircraft flight testing

B.S. (Engineering and Mechanics), distinguished ●graduate, U.S. Air Force AcademyM.S. (Mechanical Engineering), Georgia Institute of ●TechnologyGraduated from the U.S. Air Force Test Pilot School ●and has flown in over 25 different aircraft as a Flight Test Engineer

RAYMOND L. CARNEY, JR.

Age: 51

Joined KBR in: 2017

Vice President and Chief Accounting Officer


Prior Business Experience EducationChief Accounting Officer and Vice President of ●Exterran CorporationChief Accounting Officer, Vice President and Controller ●of Dresser-Rand Group Inc.Group Controller for Global Rolled Products, Hard Alloy ●Extrusions and Asia of Alcoa Inc.Manager of Financial Transactions of Alcoa Inc.●Various leadership positions at EY responsible for ●client projects including public filings, acquisitions and audit engagements

B.S. (Accounting), Pennsylvania State University●Certified Public Accountant●



Executive Officers

GREGORY S. CONLON

Age: 50

Joined KBR in: 2016

Chief Digital and Development Officer

Current Position since: January 2019

Prior Business Experience EducationKBR Executive Vice President and Chief Development ●Officer responsible for Strategy, Global Business Development, Marketing, and Mergers & AcquisitionsKBR President, Asia-Pacific (“APAC”) responsible for ●Engineering & Construction (“E&C”) and Government Services (“GS”) in this regionKBR President, E&C APAC●Executive Vice President leading business ●development globally for the WorleyParsons Services business line, the largest business within WorleyParsonsMr. Conlon has over 25 years of experience in the E&C ●business, with global experience across a range of subsectors from hydrocarbons to specialist infrastructure.Throughout his career, Mr. Conlon pursued challenging ●project execution and management opportunities in the energy and resources sector and held positions in Australia, Canada, China, Indonesia, Singapore, Thailand, and the United Kingdom.

B.S. (Mechanical Engineering), Royal Melbourne ●Institute of Technology

JOHN T. DERBYSHIRE

Age: 68

Joined KBR in: 2008

President, Technology


Prior Business Experience EducationKBR President, Technology & Consulting●KBR President, KBR Technology responsible for KBR’s ●global technology licensing business, delivering technology, proprietary equipment, engineering, and consulting services to the refining, petrochemical, coal monetization, and synthesis gas segmentsKBR Senior Vice President, Commercial Management ●for the Technology Business UnitVice President and General Manager of Invensys ●Process Systems global solutions businessVarious executive leadership roles at Aspen ●TechnologyVice President, Sales and Marketing at ABB Process ●Automation

B.S. (Chemical Engineering), University of Salford in ●the United Kingdom



Executive Officers

J. JAY IBRAHIM

Age: 58

Joined KBR in: 2015

President, Energy Services

Current Position since: February 2018

Prior Business Experience EducationKBR President, Europe, Middle East and Africa ●(“EMEA”) and APAC responsible for E&C and GS in these regionsKBR President, EMEA responsible for E&C and GS in ●this regionKBR President, E&C EMEA●Mr. Ibrahim has over 22 years of E&C and GS ●experience across the globe, having served in a variety of engineering, project management, business development, and business management roles for Parsons E&C/WorleyParsons.Mr. Ibrahim brings to KBR a wealth of senior project ●and construction management experience within the hydrocarbon, infrastructure, and government services sectors as well as broad experience in complex contract negotiations, business analysis, and long-range strategic planning in both domestic and international markets.

B.S. (Mechanical Engineering), Wichita State ●University M.S. (Mechanical Engineering), Wichita State ●UniversityDiploma in Advanced Management, Harvard University●

IAN J. MACKEY

Age: 53

Joined KBR in: 2015

Executive Vice President, Chief Corporate Officer

Current Position since: January 2016

Prior Business Experience EducationKBR Executive Vice President, Global Human ●ResourcesGlobal People Director at WorleyParsons Services ●where he was responsible for the overall strategy and delivery of all human resources activities for the companyDirector of Human Resources at Carillion PLC●

Ashridge Management College — Tarmac Executive ●ProgrammeCarillion Accelerated Leadership Programme — ●Corporate Top 20 Development Programme

FARHAN MUJIB

Age: 55

Joined KBR in: 1988

President, Delivery Solutions


Prior Business Experience EducationKBR President, Hydrocarbons Services Americas●KBR President, E&C Americas●KBR Executive Vice President, Commercial●KBR Executive Vice President, Operations●During his 30-year career with KBR, Mr. Mujib has ●worked in Africa, Australia, Asia, Europe, the Americas, and the Middle East, employing his in-depth knowledge of international project requirements, cultural sensitivities, and business practices to manage a number of major developments.

B.S. (Civil Engineering), University of Engineering and ●Technology in Lahore, PakistanMaster of Engineering from the Asian Institute of ●Technology in Bangkok, ThailandM.B.A., Macquarie University in Sydney, Australia●Fellow, Institution of Engineers, Australia●Chartered Professional Engineer●



Executive Officers

MARK W. SOPP

Age: 53

Joined KBR in: 2017

Executive Vice President and Chief Financial Officer

Current Position since: February 2017

Prior Business Experience EducationChief Financial Officer and Executive Vice President for ●Leidos Holdings, Inc., previously Science Applications International Corporation, one of the largest publicly-traded government contractors in the U.S. with significant technically-focused commercial professional services operations, including serving energy marketsVarious executive positions with Titan Corporation, ●also involved in government contracting and commercial business areas

B.S. (Accounting), New Mexico State University●Completed the Executive Program at UCLA Anderson ●School


Part Two


Corporate Governance 30Corporate Governance Materials 30

Role of the Board of Directors 30

Independence Standards 30

Board of Directors Leadership Structure 31

Risk Oversight Role of the Board of Directors 31

Directors’ Meetings and Stockholder Communications with Directors 32

Management Succession Planning 32

The Board of Directors and Standing Committees of Directors 33


Code of Ethics 37

Contact the Board 38

Compensation Discussion and Analysis 39Executive Summary 39

Elements of Compensation 45

Other Compensation Elements 56

Impact of Executive Conduct or a Restatement of Earnings on Compensation (Clawback Policy) 57

Impact of Accounting, Regulatory, and Tax Requirements on Compensation 57

Stock Ownership Guidelines for Officers 58

No Pledging 58

Minimum Holding Period for Restricted Stock Units and Stock Options 58


Conclusion 59

Compensation Committee Report 60

Compensation Committee Interlocks and Insider Participation 60





Corporate Governance MaterialsWe are committed to good corporate governance and to and Corporate Governance Guidelines and the charters of eacheffective communication with our stockholders. The roles, duties of the committees of our Board of Directors on our website atand responsibilities of the Board of Directors and each www.kbr.com. Copies will be provided to any stockholder whocommittee of the Board of Directors are summarized below. To requests them by writing to our Investor Relations Departmentensure that our stockholders have access to our governing at: 601 Jefferson Street, Suite 3400, Houston, Texas 77002.documents, we provide copies of our Code of Business Conduct

Role of the Board of DirectorsThe Board of Directors represents the interests of our policy that Board members are expected to make every effort tostockholders in perpetuating a successful business. It is the attend the meetings of the Board and committees of the Boardresponsibility of the Board of Directors to provide oversight of upon which they serve, as well as stockholder meetings. All ofthe effectiveness of management’s policies and decisions, KBR’s directors attended greater than 80% of the aggregate ofincluding the execution of its strategies, with a commitment to all meetings of the Board and of committees on which theyenhancing stockholder value over the long term. To this end, served during the periods that they served during 2018.Board members are expected to act in the best interests of allstockholders, be knowledgeable about our businesses, exerciseinformed and independent judgment and maintain anunderstanding of general economic trends and conditions as wellas trends in corporate governance. In addition, it is our Board’s

Our Corporate Governance Guidelines provide that all Directorsshould attend our annual stockholder meetings, and all of ourdirectors attended our 2018 Annual Meeting of Stockholders.

Independence StandardsAt this time, all of our directors are independent, as set forth inour Corporate Governance Guidelines and outlined below,except our President and Chief Executive Officer, Mr. Bradie,who does not qualify as an independent director.

A director will be considered independent under our CorporateGovernance Guidelines if he or she:

has no material relationship with KBR;●has not been employed by us or any affiliate of ours during the●preceding three years, and no member of the director’simmediate family has been employed as an executive officer ofours or any of our affiliates during the preceding three years;

has not received, and does not have an immediate family●member who has received, during any twelve-month periodwithin the preceding three years, more than $100,000 in directcompensation from KBR, other than director’s fees, committeefees or pension or deferred compensation for prior service;

is not a partner or an employee of KBR’s independent auditor,●and was not during the past three calendar years a partner oremployee of KBR’s independent auditor who personallyworked on KBR’s audit;

employee of KBR’s independent auditor who personallyworked on KBR’s audit;

does not have an immediate family member who is a partner●of KBR’s independent auditor or an employee of KBR’sindependent auditor who participates in that firm’s audit,assurance or tax compliance (but not tax planning) practice orwas during the past three calendar years a partner or

is not a current employee and does not have an immediate●family member who is a current executive officer of anycompany that has made payments to, or received paymentsfrom, KBR or any of its affiliates in an amount which, in any ofthe last three fiscal years, exceeds the greater of $1 million or2% of such other company’s consolidated gross revenues; and

has not (and has not had a family member who) within the●preceding three years served as an executive officer with acompany for which a KBR executive served on itscompensation committee.

The definition of independence and compliance with this policywill be reviewed periodically by the Nominating and CorporateGovernance Committee. All directors complete independencequestionnaires at least annually, and our Board makesdeterminations of the independence of its members under thelisting standards of the NYSE and the SEC requirements forAudit Committee members. Our Board believes that itsmembership should include no more than two directors who arealso employees of KBR. While this number is not an absolutelimitation, other than the Chief Executive Officer, who should atall times be a member of the Board, employee directors shouldbe limited only to those officers whose positions or potentialmake it appropriate for them to sit on the Board.




Board of Directors Leadership Structure Since March 31, 2014, Mr. Carroll, the Company’s former LeadDirector, began serving as non-executive Chairman of the Board.Our non-executive Chairman leads the Board. Mr. Carroll hassignificant board experience, as described in his biographicalinformation in this proxy statement, and works closely withMr. Bradie and the Board on risk oversight and governancematters. Prior to being non-executive Chairman of the Board,Mr. Carroll served as the Company’s Lead Director, as well asChairman of the Nominating and Corporate GovernanceCommittee, since 2012, and a director since April 2007. UponMr. Carroll's retirement on May 15, 2019, General Lyles willassume the role of non-executive Chairman of the Board.General Lyles brings substantial board experience to the positionof Chairman, as described in his biographical information in thisproxy statement. Our CEO is responsible to the Board for theoverall management and functioning of the Company.

KBR’s Corporate Governance Guidelines provide for theChairman of the Board, if the Chairman of the Board isindependent, to perform a strong role in the leadership of theBoard, as follows:

The Chairman of the Board presides at executive sessions of●the non-executive directors at each regular Board meeting andsets the agenda for these sessions.

The Chairman of the Board approves meeting agendas for●each regular Board and committee meeting and approves theinformation to be sent to the directors with respect to eachmeeting.

approval by the Compensation Committee, the evaluation andcompensation of the CEO for the next full year and the resultsof the Board’s review and approval of managementsuccession plans and development programs.

The Chairman of the Board presides at the executive session●of the Board to evaluate the performance of our CEO. Inaddition, he has a key role in communicating to the CEO, after

KBR’s Corporate Governance Guidelines provide for thefollowing checks and balances regarding the role of the CEO:

The CEO may not serve on any committees of the Board, as●only non-executive directors may do so.

One of the elements of the CEO’s evaluation is the extent to●which he keeps the Board informed on matters affecting theCompany and its operating units.

At least two-thirds of the Board must be independent●directors. In practice, our CEO has been the only executivedirector at KBR since its inception as an independent publiccompany. Each of our other directors is independent, asdefined under the listing standards of the NYSE.

KBR’s Board of Directors has determined that its currentleadership structure is appropriate as of the date of this proxystatement, given the complexity and global nature of KBR’sbusiness and the risks inherent in our business. The Boardbelieves that Mr. Carroll and his successor, General Lyles, actingin the role as non-executive Chairman, are well positioned tofacilitate communications with the Board of Directors andstockholders about our complex business. During Mr. Carroll’sand General Lyles's service on the Board, KBR’s business hasundergone significant changes, including reorganization intomore strategically-aligned business groups and evolution from awholly-owned subsidiary with significant support from its parentcompany into an independent operating company.

Risk Oversight Role of the Board of Directors KBR’s Board of Directors considers risk oversight to be anintegral part of its role, and discussions regarding risks faced bythe Company are part of its meetings and deliberationsthroughout the year. KBR’s enterprise risk managementframework provides an effective tool for executive oversight ofmanaging risks and the Board receives semi-annual reportsregarding significant strategic, operational, financial, and hazardrisks determined by management to have a potential significantimpact on the Company as a whole. The risk report involves bothcurrent and emerging risks and is the culmination of a processinvolving input from all business groups and executiveleadership. Management’s assessment of risk includes thelikelihood and impact of specific strategic, operational, financialand hazard risks, the perceived trend for each of those specificrisks — whether increasing, decreasing or stable — and themeasures being taken to monitor and mitigate those risks.

reviewing projects, the Board is presented with management’sassessment of a particular project’s cost exposure associatedwith operations risk, liabilities and funding risks, among others.In this manner, KBR’s Board is engaged in risk oversight at theoutset of the largest projects, which could have a material effecton KBR’s operations and financial condition.

In addition to the enterprise risk management process describedabove, the Board also engages in risk oversight through theproject approval process, whereby projects reaching a thresholdlevel of expected revenues require Board approval. Fixed-pricecontracts have a lower threshold level than reimbursable-typecontracts because of their potential price and financial risks. In

The Board also engages in risk oversight through the approval ofacquisitions proposed by management where the purchaseconsideration exceeds a certain threshold. The review conductedby the Board includes presentations by management regardingthe strategic fit of the acquired business within the Company’sexisting operations and offerings; the commercial, legal, andfinancial risks identified in the diligence process, among others,and the measures to be implemented by management tomitigate those risks; the valuation analysis and projected returnson investment; agreement terms, including conditions to close,ability to terminate and terms of indemnification protection;details on the planned integration, including budgets andemployee resources; and metrics identified for measuring thesuccess of the acquisition. In this process, the Board engages inoversight of the various risks associated with acquiring andintegrating new businesses, which, if not successfully




performed, could have a material effect on KBR’s operations and with KBR’s independent auditors at each meeting prior to thefinancial condition. The Board is also engaged in risk oversight release of quarterly and annual results. The Audit Committeethrough regular reports from its Audit Committee. The Audit Chairman provides a report of the Audit Committee’s activities toCommittee is charged with reviewing with management the the full Board at each regular meeting and in this manner theCompany’s major financial risk exposures, as well as other areas entire Board is informed of matters that the Audit Committeeof risk exposure if requested to do so by the Board, and the determines warrant full Board discussion. Additional risksteps management has taken to monitor and mitigate those oversight reviews undertaken by the Audit Committee in 2018exposures. The Audit Committee receives periodic reports from are included in the Audit Committee Report on page 82.management on these areas of potential exposure, includinglitigation, liquidity and capital resources, financial reporting anddisclosures, regulatory and tax risks, among others. The AuditCommittee also receives in-depth periodic reports frommanagement regarding ethics and compliance issues, and ourrisk assessment and control framework to monitor and managerisk, such as internal controls testing, internal audits and foreignexchange risk management. Furthermore, the Audit Committeereceives periodic reports from management on cybersecuritymeasures and assessments performed on their efficacy. TheAudit Committee conducts private sessions with KBR’s ChiefFinancial Officer, Chief Accounting Officer, Vice President ofInternal Audit and General Counsel at each regular meeting and

The Compensation Committee has oversight of ourcompensation programs and reviews misalignment risks of ourprograms at least on an annual basis, internally and with externaladvisors.

Finally, the Health, Safety, Security, Environment and SocialResponsibility Committee has the responsibility for the oversightof KBR’s activities in managing its major risk exposures withinthe health, safety and sustainable development areas. TheHealth, Safety, Security, Environment and Social ResponsibilityCommittee receives periodic reports from KBR’s Chief HSSEOfficer relating to these risk exposures and the Company’sefforts to mitigate those risks.

Directors’ Meetings and Stockholder Communications with Directors The Board of Directors will meet each year immediatelyfollowing the Annual Meeting of Stockholders to transact suchbusiness as may properly be brought before the meeting.Additional regular meetings of the Board of Directors may beheld without notice at such times as the Board of Directors maydetermine, but shall consist of at least four other regularlyscheduled meetings. Special meetings may be called by theChairman of the Board of Directors, the Chief Executive Officer,the President, the Corporate Secretary or a majority of thedirectors in office. KBR’s Bylaws permit action to be takenwithout a meeting if all members of the Board of Directorsconsent to such action in writing or by electronic transmission.During 2018, the Board of Directors held twelve meetings. TheChairman of the Board presides at all Board meetings.

During each regular Board meeting, KBR’s non-executivedirectors, all of whom have been determined by our Board to beindependent under the standards of our Corporate GovernanceGuidelines and the NYSE, meet in scheduled executive sessions.Our non-executive Chairman of the Board, Mr. Carroll, presidesat all executive sessions of the Board. During 2018, thenon-executive directors met without management eight times.

directors consider qualitative and quantitative elements of theCEO’s performance, including:

In addition, each December our non-executive directors meet inexecutive session to evaluate the performance of our ChiefExecutive Officer. In evaluating our CEO, the non-executive

leadership and vision;●integrity;●keeping the Board informed on matters affecting KBR and its●operating units;

performance of the business (including such measurements●as total stockholder return and achievement of financialobjectives and goals);

development and implementation of initiatives to provide●long-term economic benefit to KBR;

accomplishment of strategic objectives; and●development of management.●

In addition, the non-executive directors annually reviewmanagement succession plans and development programs forsenior members of executive management. The CEO’sperformance evaluation and compensation for the next full year,management succession plans, and development programs willbe communicated to the CEO only after review and approval bythe Compensation Committee and the full Board of Directors(other than the CEO).

Management Succession Planning The Board of Directors considers management evaluation and CEO on our website at www.kbr.com/About/Corporate-Governance,succession planning an important responsibility of the Board. Our provide that the Board’s responsibility for effective governance ofCorporate Governance Guidelines, which are available the corporation includes reviewing succession plans and




management development programs for members of executivemanagement. The Board of Directors, with input from theNominating and Corporate Governance Committee, the Chairmanof the Board, and the CEO, regularly reviews KBR’s successionplan and management development programs for all seniormanagement positions. The review process includes identificationof internal candidates, any developmental needs for suchcandidates, and a determination of whether a search for externalcandidates would be more appropriate.

contingency plans for succession of the CEO. This processnecessarily involves the development and review of criteria forthe CEO position that reflect the Company’s business strategyand identifying and developing internal candidates or identifyingthe need for external candidates, as appropriate. Additionally,one of the elements that the CEO is evaluated upon each yearby the Compensation Committee is the existence andcompleteness of a succession plan, including assessment anddevelopment of internal candidates for the CEO and top-levelexecutive positions. The CEO’s evaluation and compensation forIssues relating to CEO succession planning are also addressedthe next full year, including an evaluation of the completeness ofregularly, and no less than annually, by the entire Board. Thisaspects of the management succession plans and developmentprocess is led by the non-executive Chairman of the Board onprograms that are the responsibility of the CEO, arebehalf of the non-executive directors. While the Nominating andcommunicated to the CEO by the non-executive Chairman of theCorporate Governance Committee performs the initial review ofBoard after review and approval by the Compensationthe succession plans and makes recommendations to the BoardCommittee and the full Board of Directors (other than the CEO).as necessary, the entire Board has primary responsibility for CEO

succession planning and develops both long-term and

The Board of Directors and Standing Committees of Directors KBR’s Bylaws authorize the Board of Directors to appoint such delegated certain duties and responsibilities: the Auditcommittees as they deem advisable, with each committee Committee, the Compensation Committee, the Health, Safety,having the authority to perform the duties as determined by the Security, Environment and Social Responsibility Committee, andBoard. A substantial portion of the analysis and work of the the Nominating and Corporate Governance Committee. Each ofBoard is done by standing Board committees. A director is the standing committees is composed entirely of non-executiveexpected to participate actively in the meetings of each directors and, in the business judgment of the Board,committee to which he or she is appointed. At this time, the independent, directors. The members and chairperson of theBoard of Directors has four standing committees to which it has respective committees are indicated below:

AgeDirector

SinceAudit

CommitteeCompensation

Committee

Health, Safety, Security, Environment and

Social Responsibility Committee

Nominating and Corporate Governance Committee

Mark E. Baldwin 65 2014

James R. Blackwell 60 2014

Loren K. Carroll 75 2007

Lester L. Lyles 72 2007

Wendy M. Masiello 60 2017

Jack B. Moore 65 2012

Ann D. Pickard 63 2015

Umberto della Sala 70 2015

Member Chairperson Chairman of the Board Financial Expert

The Board of Directors has approved a charter for each of the standing committees, which sets forth the duties and responsibilitiesdelegated to each of the committees by the Board of Directors and governs each of the committee’s actions. The charter for each ofthe standing committees is available on KBR's website, www.kbr.com, by choosing “Our Company” under the “About” menu, thenselecting “Corporate Governance” and “Board Committees.” The purpose, duties and responsibilities of each committee are brieflydescribed below.




Audit Committee The Audit Committee currently comprises General Masiello,Ms. Pickard and Messrs. Baldwin and Carroll. Mr. Baldwin servesas Chairman. The Audit Committee met ten times in 2018.

Code of Business Conduct. The Audit Committee also engagesour principal independent registered public accounting firm foreach fiscal year, reviews the audit and other professionalservices rendered by our principal independent registered publicThe Audit Committee reviews and reports to the Board ofaccounting firm and periodically reviews the independence ofDirectors the scope and results of audits by our principalour principal independent registered public accounting firm.independent public accountants and our internal auditing staffAdditional information about the Audit Committee and itsand reviews with the principal independent public accountantsresponsibilities is included in the section of this proxy statementthe effectiveness of our system of internal controls. It reviewsentitled “Audit Committee Report” and in the charter of thetransactions between us and our directors and officers, ourAudit Committee, which was adopted by the Board of Directors.policies regarding those transactions and compliance with our

Audit Committee Financial Expert Determinations Our Board has determined that each member of its Audit Committee is financially literate and qualifies as an “audit committeefinancial expert,” as defined in Item 407(d) of Regulation S-K and, as described above, that each member of the Audit Committee isindependent, as defined by our Corporate Governance Guidelines, the NYSE’s listing standards and Rule 10A-3 under the SecuritiesExchange Act of 1934.

Compensation CommitteeThe Compensation Committee currently comprisesMessrs. Blackwell, Lyles, Moore, and della Sala. Mr. Mooreserves as Chairman. The Board of Directors has determined thateach member of the Compensation Committee is independentas defined in the listing standards of the NYSE. TheCompensation Committee met six times during 2018.

The Compensation Committee reviews and recommends to theBoard of Directors the compensation and benefits of ourexecutive officers, establishes and reviews general policiesrelating to our compensation and benefits and administers thecompensation plans described in the Compensation Discussionand Analysis in this proxy statement. The CompensationCommittee’s responsibilities include, but are not limited to:

evaluating and advising the Board regarding the compensation●policies applicable to our executive officers, including guidanceregarding the specific relationship of corporate performance toexecutive compensation;

reviewing and recommending to the Board: the corporate●goals and objectives relevant to compensation for the CEO;the CEO’s performance in light of these established goals andobjectives; the CEO’s compensation, including salary, bonus,incentive and equity compensation based on this evaluationand considering, with respect to the long-term incentivecompensation component of the CEO’s compensation, KBR’sperformance and relative stockholder return, the value ofsimilar incentive awards to chief executive officers atcomparable companies, the awards given to the CEO in pastyears and any other factors it deems relevant;

reviewing the CEO’s recommendations with respect to, and●approving, the compensation to be paid to KBR’s otherexecutive officers in accordance with the generalcompensation policies established by the Board;

reviewing and making recommendations to the Board with●respect to incentive compensation and other stock-based plans;

assisting the full Board with respect to the administration of●KBR’s incentive compensation and other stock-based plans;

maintaining appropriate, regular contact with KBR●management;

reviewing and discussing with management the●“Compensation Discussion and Analysis” and determiningwhether to recommend to the Board that it be included inKBR’s annual proxy statement or annual report on Form 10-K;

preparing and publishing, over the names of the members of●the Compensation Committee, an annual executivecompensation report as required by the SEC to be included inKBR’s annual proxy statement or annual report on Form 10-K;

evaluating its own performance and reviewing the adequacy of●its charter, at least annually;

reviewing the risk assessment of KBR’s compensation plans●to ensure that the programs do not create risks that arereasonably likely to have a material adverse effect on KBR (in2018, our Compensation Committee determined that ourcompensation plans do not create risks that are reasonablylikely to have a material adverse effect on KBR);

approving disclosures and making recommendations to the●Board regarding the disclosures on KBR’s Advisory Vote ToApprove Named Executive Officer Compensation and theAdvisory Vote On The Frequency of Advisory Votes ToApprove Named Executive Officer Compensation to beincluded in KBR’s annual proxy statement or annual report onForm 10-K in required years and to disclose on Form 8-K, ifrequired, the frequency in which KBR will hold the AdvisoryVote To Approve Named Executive Officer Compensation;

reviewing periodically the compensation paid to non-executive●directors (including Board and committee chairpersons) in theform of annual retainers and meeting fees, if any, and makingrecommendations to the Board regarding any adjustments. In2018, we performed a compensation review against thebenchmark for our directors; and




selecting a compensation consultant or other adviser to the●Compensation Committee after considering the factorsidentified by the SEC (as well as any other factors identified bythe NYSE) as affecting the independence of such consultant oradviser, including, but not limited to the following:

the provision of other services to KBR by the employer of–the compensation consultant or other adviser;

the amount of fees received from KBR by the employer of–the compensation consultant or other adviser, as apercentage of the total revenue of the employer of thecompensation consultant or other adviser;

the policies and procedures of the compensation consultant–or other adviser that are designed to prevent conflicts ofinterest;

any business or personal relationship of the compensation–consultant or other adviser with a member of theCompensation Committee;

any stock of KBR owned by the compensation consultant or–other adviser; and

any business or personal relationship of the compensation–consultant or other advisor or the compensation consultantor other advisor’s employer with any of the executiveofficers of KBR.

Health, Safety, Security, Environment and Social Responsibility CommitteeThe Health, Safety, Security, Environment and SocialResponsibility Committee currently comprises General Masiello,Ms. Pickard, and Messrs. Baldwin and della Sala. Ms. Pickardserves as Chairperson. The Health, Safety, Security,Environment and Social Responsibility Committee met twice in2018.

The Health, Safety, Security, Environment and SocialResponsibility Committee’s responsibilities include, but are notlimited to:

reviewing the status of KBR’s health, safety, security,●environmental, and social responsibility policies andperformance, including processes to ensure compliance withapplicable laws and regulations;

reviewing KBR’s health, safety, security, environmental, and●social responsibility performance to determine consistencywith policies and goals;

reviewing and providing input to KBR on the management of●current and emerging health, safety, security, environmental,and social responsibility issues;

overseeing KBR’s activities in managing its major risk●exposures within the health, safety, security, environmental,and social responsibility areas;

reviewing KBR’s political and charitable contributions and●social responsibility activities; and

reviewing KBR’s public sustainability report.●

Nominating and Corporate Governance CommitteeThe Nominating and Corporate Governance Committee currentlycomprises Messrs. Blackwell, Lyles and Moore. General Lylesserves as Chairman. The Board of Directors has determined thateach member of the Nominating and Corporate GovernanceCommittee is independent as defined in the listing standards ofthe NYSE. The Nominating and Corporate GovernanceCommittee met four times during 2018.

The Nominating and Corporate Governance Committee’sresponsibilities include, but are not limited to:

developing, implementing and periodically reviewing KBR’s●corporate governance guidelines;

developing and implementing a process to assess Board and●committee effectiveness;

identifying and evaluating individuals qualified to become●Board members, consistent with Board-approved criteria, thelisting standards of the NYSE and any other applicable law,regulation or rule;

performing an annual evaluation of our independent directors;●determining the composition of the Board and its committees,●including selection of the director nominees for the nextannual meeting of stockholders, and changes to the size andcomposition of the Board or any of its committees; and

reviewing succession plans and management development●programs for members of executive management and theCEO and providing regular reports on the progress of thesuccession planning and management development to theBoard.




Stockholder Nominations of DirectorsStockholders may suggest candidates for nomination by theNominating and Corporate Governance Committee by contactingthe Committee in the manner provided below under “Contactthe Board.” If selected for nomination by the Nominating andCorporate Governance Committee, as described below under“Process for the Selection of New Directors,” such candidatewill be included in KBR’s proxy statement for the annual meetingof stockholders.

Nominations by stockholders may also be made at an annualmeeting of stockholders in the manner provided in our Bylaws,although such nominees will not necessarily be included inKBR’s proxy statement. The Bylaws provide that a stockholderentitled to vote for the election of directors may makenominations of persons for election to the Board at a meeting ofstockholders by complying with required notice procedures.Nominations shall be made pursuant to written notice to ourSecretary at the address set forth on page 90 of this proxystatement and must be received at our principal executiveoffices not less than ninety (90) days, nor more than onehundred twenty (120) days, prior to the anniversary date of theimmediately preceding annual meeting of stockholders. Thenotice shall set forth the information required by our Bylaws,including:

as to each person the stockholder proposes to nominate for●election or reelection as a director:

the name, age, business address and residence address of–the person;

the principal occupation or employment of the person;–

the class and number of shares of KBR common stock that–are beneficially owned by the person;

directors pursuant to Regulation 14A under the SecuritiesExchange Act of 1934, as amended;

all other information relating to the person that is required to–be disclosed in solicitations for proxies for election of

such person’s written consent to serve as a director if–elected;

a description of all direct and indirect compensation and–other material monetary or other arrangements between thestockholder and such person; and

such person’s completed director’s and officer’s–questionnaire and agreement not to enter into certainarrangements; and

as to the stockholder giving the notice:●the name and record address of the stockholder;–

the class and number of shares of KBR common stock that–are beneficially owned by the stockholder;

a representation that the stockholder intends to appear in–person or by proxy at the meeting to propose thenomination;

any hedging or other transactions entered into with the–effect or intent to mitigate loss to, or manage risk or benefitof share price changes for, or to increase or decrease thevoting power of, the stockholder with respect to KBR’sshares; and

a representation whether the stockholder intends to solicit–proxies from the holders of at least the percentage ofcommon stock required to elect the nominee.

The proposed nominee may be required to furnish otherinformation as KBR may reasonably require to determine theeligibility of the proposed nominee to serve as a director. At anymeeting of stockholders, the presiding officer may disregard thepurported nomination of any person not made in compliancewith these procedures.

Qualifications of Directors Candidates nominated for election or re-election to the Board ofDirectors should possess the following qualifications:

personal characteristics:●the highest personal and professional ethics, integrity and–values;

an inquiring and independent mind;–

practical wisdom and mature judgment;–

broad training and experience at the policy-making level in●business, government, education or technology;

expertise that is useful to KBR and complementary to the●background and experience of other Board members so thatan optimum balance of members on the Board can beachieved and maintained;

willingness to devote the required amount of time to carrying●out the duties and responsibilities of Board membership;

commitment to serve on the Board for several years to●develop knowledge about KBR’s principal operations;

willingness to represent the best interests of all stockholders●and objectively appraise management performance; and

involvement only in activities or interests that do not create a●conflict with his or her responsibilities to KBR and itsstockholders.

The Nominating and Corporate Governance Committee isresponsible for assessing the appropriate mix of skills andcharacteristics required of Board members in the context of theneeds of the Board at a given point in time and shall periodicallyreview and update the criteria. Diversity in personal background,race, gender, age and nationality for the Board as a whole maybe taken into account in considering individual candidates, butKBR does not have a policy with regard to any particular aspectof diversity of its directors.




Process For The Selection of New DirectorsThe Board is responsible for filling vacancies on the Board. TheBoard has delegated to the Nominating and CorporateGovernance Committee the duty of selecting and recommendingprospective nominees to the Board for approval. The Nominatingand Corporate Governance Committee considers suggestions ofcandidates for Board membership made by current Committeeand Board members, KBR management, and stockholders. Eachof the nominees for director at this meeting is an incumbentdirector recommended by the non-executive directors. TheCommittee may also retain an independent executive searchfirm to identify candidates for consideration. The Nominating andCorporate Governance Committee will also consider candidatesnominated by the stockholders in accordance with our Bylaws. Astockholder who wishes to recommend a prospective candidateshould notify KBR’s Secretary, as described in this proxystatement.

When the Nominating and Corporate Governance Committeeidentifies a prospective candidate, the Committee determineswhether it will carry out a full evaluation of the candidate. Thisdetermination is based on the information provided to theCommittee by the person recommending the prospectivecandidate and the Committee’s knowledge of the candidate.

This information may be supplemented by inquiries to theperson who made the recommendation or to others. Thepreliminary determination is based on the need for additionalBoard members to fill vacancies or to expand the size of theBoard and the likelihood that the candidate will meet the Boardmembership criteria listed above. The Committee will determine,after discussion with the non-executive Chairman of the Boardand other Board members, whether a candidate should continueto be considered as a potential nominee. If a candidate warrantsadditional consideration, the Committee may request anindependent executive search firm to gather additionalinformation about the candidate’s background, experience, andreputation and to report its findings to the Committee. TheCommittee then evaluates the candidate and determineswhether to interview the candidate. Such an interview would becarried out by one or more members of the Committee andothers as appropriate. Once the evaluation and interview arecompleted, the Committee recommends to the Board whichcandidates should be nominated. The Board makes adetermination of nominees after review of the recommendationand the Committee’s report.

Anti-Hedging PolicyOur anti-hedging policy prohibits all members of our Board of Directors, employees, and agents from (i) speculative trading in oursecurities; (ii) engaging in hedging transactions using our securities; (iii) ”short selling” our securities; and (iv) trading derivativesecurities, such as put options, call options, swaps, or collars related to our securities.

Code of EthicsKBR has adopted a “code of ethics,” as defined in Item 406(b) of the disclosure requirements regarding any amendment to, orRegulation S-K. KBR’s code of ethics, known as the Code of waiver from, a provision of the Code of Business Conduct thatBusiness Conduct, applies to all directors, officers, and relates to any element of the definition of code of ethics setemployees of KBR, including, but not limited to, its principal forth in Item 406(b) of Regulation S-K, including theexecutive officer, principal financial officer, principal accounting requirements of Item 5.05 of Form 8-K, by posting suchofficer, and controllers, and also applies to all employees of information on its website, www.kbr.com. The most recentKBR’s agents. KBR has posted its Code of Business Conduct on revisions to the Code of Ethics were approved by the Board ofits website, www.kbr.com. In addition, KBR intends to satisfy Directors in February 2016.




Contact the BoardTo foster better communication with our stockholders, KBR hasestablished a process for stockholders and other interestedparties to communicate with the Audit Committee and the Boardof Directors. The process has been approved by our Board andits Audit Committee and is designed to meet the requirementsof the NYSE and the SEC. You may communicate with our Boardof Directors or the non-executive directors via mail (Board ofDirectors c/o Director of Business Conduct, KBR, Inc.,P.O. Box 3406, Houston, Texas 77253-3406), telephone1-855-231-7512 (toll-free from the U.S. or Canada) or1-503-619-1884 (calling collect from any other country), or e-mail([email protected]). Information regarding these methods ofcommunication is also on our website, www.kbr.com, under“Corporate Governance.”

Our Director of Business Conduct reviews all communicationsdirected to the Audit Committee and the Board of Directors. TheChairman of the Audit Committee is promptly notified of anysignificant communication involving accounting, internal controls,auditing matters or any other significant communications.Communications addressed to a named director are promptlysent to the director. Communications directed to thenon-executive directors are promptly sent to the non-executiveChairman of the Board. A report summarizing the significantcommunications is sent to each director quarterly, and copies ofcommunications are available for review by any director, exceptthat those designated for the non-executive directors are notavailable to executive directors. The process has been approvedby both the Audit Committee and the Board and is designed tomeet the requirements of the NYSE and the SEC. Concerns maybe reported anonymously or confidentially.



Compensation Discussion and Analysis


Executive Summary

Named Executive OfficersThis Compensation Discussion and Analysis provides a detailed in making compensation decisions during 2018. Thisdescription of our compensation philosophy, objectives, policies, Compensation Discussion and Analysis focuses on theand practices in place during 2018, and explains the factors compensation of our Named Executive Officers or “NEOs” forconsidered by the Compensation Committee of our Board of 2018, namely:Directors (our “Compensation Committee” or the “Committee”)

Name Title

Stuart Bradie President and Chief Executive Officer

Mark Sopp Executive Vice President and Chief Financial Officer

Farhan Mujib President — Delivery Solutions

Jay Ibrahim President — Energy Services

Ian Mackey Executive Vice President, Chief Corporate Officer

These NEOs, together with the other members of our Senior Executive Management whose compensation is determined by ourCompensation Committee and our Board of Directors, are referred to as our “Senior Executive Management.”

Financial and Performance Highlights

Performance Highlights2018 marked the second consecutive year that KBR hasdelivered at or above expectations. We have not only met orexceeded our EPS target, but also margins, cash flow targetsand revenue growth. The drivers for this outstanding level ofperformance start with our resilience during macroeconomic andindustry challenges and endurance with which we carried outour robust strategic vision.

Our revenue growth was attributable to strong organic growthand our acquisitions of the operational management contract ofour Aspire Defence project joint venture in the U.K. and SGT, aleading provider of high-value engineering, mission operations,scientific and IT software solutions in the governments servicesmarket. These acquisitions further added to our strategic shift toincrease long-term predictable profits and cash flow and toposition KBR for long-term growth.

Our Government Services business grew 58% in 2018, 17%organic. Our team continued to win re-competes, capturemarket share, drive new growth synergies and capitalize onincidental situations.

the joint operations communities, ramp up of recent newawards, such as NASA Mission Systems Operations Contract,Diego Garcia and new C4ISR work for the Air Force. Lastly, wewere asked by the Air Force to lead in the restoration efforts ofthe Tyndall Air Force Base resulting from the damage caused byHurricane Michael. We delivered on this urgent and quite sizableproject by assembling teams from both our GovernmentServices and Hydrocarbons Services businesses demonstratingour agility and synergy across KBR.

We saw on-contract growth in our logistics and engineeringservices business areas, strong new tasking of awards andexecution in systems integration for the Army, the Air Force and

Our Technology business continued its consistent track record ofgrowth and strong profitability, growing 10%, all organic. Thestrong margins in this business resulted from bundled license,equipment, engineering and catalyst sales packages coupledwith a highly-efficient overhead cost structure. Additionally, ourlicense content mix in 2018 aided margins.

In the Hydrocarbons Services business we remained committedto our commercial discipline and strong execution, whichenabled us to avoid the volatility in the industry. As a result,profits correlated much higher to revenue levels. 75% of ourHydrocarbons business' backlog represents services, whichprovide more stable profits and cash flow.

Our increase in backlog of 28% is underpinned by our privatefinancing initiatives, providing greater long-term predictability.




Our milestones in 2018 further included:

Our unwavering efforts to improve cash flow led to a decrease●in our Day Sales Outstanding (“DSO”) of 10 days from thepreceding year and 95% cash conversion. With increasedfocus on collections, distributions from joint ventures andnegotiated favorable cash advances from customers, ourGovernment Services and Technology businesses operatedwith negative working capital in the aggregate;

Our Government Services business received, among other●awards, three NASA awards demonstrating our strong presencein the space community: 1) the Large Business Prime Contractorof the Year Award by the NASA Johnson Space Center; 2) theLarge Business Prime Contractor of the Year Award by theNASA Goddard Space Flight Center; and 3) the NASA Amesaward for our Mentor-Protege efforts.

goods, increasing global population and changing regulationsallowing for a pipeline of growing opportunities. We continuedto innovate in commercializing developed leading-edgesustainable solutions by building the first K-SAATTM plant inChina. We also received our first order to build a K-SAATTM

plant in the U.S. Our K-SAATTM technology allows refiners todeliver high-octane motor and aviation fuels, using our efficientand proprietary catalyst. Our ROSE® technology, whichremoves sulfur from the heavy bottom of barrel crude is ourrevolutionary solution to IMO 2020 regulations.

Our Technology business benefited from strong market●demands driven by growing global demand for consumer

Our Koch Enid Construction project received the 2019●Associate Builders and Constructors (“ABC”) Safety Trainingand Evaluation Process award for our improvements to thesafety performance on the project as well as the 2019 ABCEagle award, the top U.S. national award recognizing oursafety, quality, subcontractor management, and usage ofproduction tools in the field.

Revenue and EBITDA growth fueled by industry-leading organicgrowth in Government Services and Technology busineses and acquisitions by Government Services business

Long-term backlog with qualitygrowth opportunity

BACKLOG

20182017

$13,497MM$10,570MM

28%

EBITDA*

20182017

REVENUE

2017 2018

18%

$4,913MM$504MM

$320MM

58%

* EBITDA is defined as earnings before interest income/expense, income taxes, other non-operating income/expense depreciation and amortization.

* Reconciliation of EBITDA to net income is provided at the end of the Proxy Statement.

$4,171MM

Pay for Performance in 20182018 was a year of strong financial results, which positionedKBR for long-term growth. In addition to the strong financialresults noted above, our one-year TSR ranked second among ourTSR Peer Group. We met or exceeded every financial goal weset in our 2018 Short-Term Incentive (“STI”) Plan. While ourachievements were above expectations, our CompensationCommittee exercised negative discretion on our safety andoperating cash flow performance metric payouts in light of a fatalemployee incident and to be fiscally conservative because ofKBR's acquisition of SGT in April 2018. Our three-year JobIncome Sold from January 1, 2016, to December 31, 2018,exceeded the target, resulting in a payout in 2019 of the KBRLong-Term Performance Cash Awards (“PAs”) granted in 2016.Our three-year TSR for the same performance period rankedbelow the median of our TSR Peer Group and earned a zeropayout.

2018 STI Plan and PAs granted in 2016 decreased from theprevious year, which is appropriately linked to Companyperformance over the past three years. 2016 was the pivotalyear that triggered the upward trajectory since the beginning of2017; as such, our results in 2016, particularly when comparedto that of our TSR Peer Group, were lagging. Our CEO's journeywith KBR has been remarkable due to his robust strategic visionto return KBR to growth to become industry leading in themarkets in which we operate. Since his appointment four and ahalf years ago, his vision, leadership, and actions returned KBRto its core capabilities: be cost-efficient, win our customers'trust, and build a solid foundation with great potential. To furtherdemonstrate the link between pay and performance, due tosatisfaction of applicable performance goals, our CEO earned100% of his KBR Performance Restricted Stock Units (“PSUs”)that were scheduled to vest in June 2018. The CEO's PSUs havea performance requirement whereby KBR's stock price musthave TSR of at least 6% for the twelve full calendar months priorto vesting in order for the PSUs to vest. As a result, while we had our second consecutive year of

increased performance and growth, our CEO’s payouts from the




Overview of Executive Compensation Philosophy, Policies and Practices

Key Considerations in Determining Executive CompensationOur Compensation Committee regularly reviews the elements ofthe individual compensation packages for our CEO and SeniorExecutive Management. Our Compensation Committeedelegates to our CEO the duty to approve and administer theindividual compensation packages for other executives andemployees, excluding our Senior Executive Management,subject to the Committee’s annual review of the delegation. Indetermining executive compensation, our CompensationCommittee takes into consideration:

Alignment with stockholders’ interest;●Importance of consistent performance;●Challenging performance metrics;●

Appropriate mix of short-term and long-term incentives; and●Targeting base salary, short-term incentives, long-term●incentives, and total compensation levels near the 50th

percentile of the competitive market for good performanceand above the 50th percentile of the competitive market forconsistent, outstanding performance over time, but also takinginto consideration other factors, including differences in ourNEOs' position responsibilities compared to comparableexecutive position responsibilities at our peers, experience,retention risk, and internal equity.

Our executive compensation program is regularly reviewed toensure that the program’s components continue to align withthe above objectives and that the program is administered in amanner consistent with established compensation policies.




Policies and PracticesBelow is a summary of our compensation policies and practices in place during 2018 for our Named Executive Officers:

Clawbacks If our Committee determines that a NEO (or any other employee) has been paid incentive ●compensation (both cash and equity) based on restated financial results, the Committee may seek recovery of any overpayments.

Stock Ownership Guidelines We require our CEO to own a significant amount of stock equivalent to five times his base salary ●and our other NEOs to own an amount of stock equivalent to three times their base salary to align their interests with our stockholders.

No Pledging No officers may pledge Company stock.●

No Hedging No officers may hedge Company stock.●

No Option Repricing We prohibit the repricing of KBR stock options.●

Market Comparison Base salary, short-term incentives, long-term incentives and total compensation levels are ●generally targeted near the median of peer companies for good performance, and above the 50th percentile of the competitive market for consistent, outstanding performance over time, but also consider other factors, including differences in our position responsibilities compared to our peers, experience, retention risk, and internal equity.

Performance-Based Compensation A majority of our NEOs’ compensation is performance-based compensation and is paid on the ●achievement of absolute and relative performance goals.

Double-Trigger The severance and change-in-control agreements require a double-trigger for a change-in-control ●termination (i.e., the occurrence of both a change-in-control and a termination of employment within two years following the change-in-control event) in order for an executive to receive change-in-control benefits.

No Employment Agreements No employment agreements are provided.●

No Tax Gross-Ups No excise tax gross-up agreements are provided.●

No House Buyouts No house buyouts are provided to any NEOs.●

We encourage you to read the following detailed discussion and analysis of our executive compensation program, including the tablesthat follow the Compensation Discussion and Analysis.

Third-Party ConsultantsUnder its charter, our Compensation Committee is authorized toretain a compensation consultant and has the sole authority toapprove the consultant’s fees and other retention terms. Whileour Compensation Committee believes that using third-partyconsultants is an efficient way to keep current regardingcompetitive compensation practices, our CompensationCommittee does not accord undue weight to the advice ofoutside professional advisors, but instead makes changes in ourcompensation program in light of whether the program’sintended objectives are being achieved. In 2018, ourCompensation Committee used the services of onecompensation consulting firm, Meridian Compensation Partners,LLC (“Meridian”). Our Compensation Committee engaged andmanaged its relationship with the Meridian executivecompensation consultants directly. In addition, Meridian reporteddirectly to the Compensation Committee with respect to allexecutive and non-executive director compensation matters.

update; (2) a review of the peer groups used to assess thecompetitiveness of our executive compensation programs forthe 2018-2019 compensation cycle; (3) regular updates of thevaluation of our long-term performance cash awards; (4) acompetitive market study of executive compensation for theSenior Executive Management; (5) regular updates on notablelegislative and regulatory activities; (6) a review of the risk profileof the proposed long-term incentive performance metrics for2019; (7) a review of the CEO’s 2019 executive compensationrecommendations for our Senior Executive Management; (8) areview of the CEO’s compensation for 2019; and (9) a review ofnon-executive director compensation for 2019.

The nature and scope of Meridian’s engagement by theCompensation Committee included advising the CompensationCommittee, as it needed, with respect to all executivecompensation matters under the Compensation Committee’spurview. The material elements of the instructions or directionsgiven to Meridian with respect to the performance of its dutiesto the Compensation Committee included engaging Meridian toprovide the Compensation Committee with: (1) a 2018 proxy

Outside of providing executive and director advisory services toour Compensation Committee, Meridian provided no otherservices to us or our affiliates. In May 2018, after theCompensation Committee reviewed the independence factorsapproved by the SEC for implementation by the NYSE inaccordance with the Dodd-Frank Wall Street Reform andConsumer Protection Act (the “Dodd-Frank Act”) forcompensation consultants and considered Meridian’sindependence based on such factors, the CompensationCommittee confirmed Meridian’s independence and lack of aconflict of interest in 2018, and approved the continued retentionof Meridian.




Core and Diversified Peer Groups In the design and administration of our 2018 executivecompensation programs for our Named Executive Officers, ourCompensation Committee considered competitive market datafrom our Core and Diversified Peer Groups. Our CompensationCommittee also used its discretion and business judgment indetermining overall compensation.

and services industry, against which we believe KBR mostcompetes for employees and business. The compensation datafor our Core Peer Group was obtained from publicly availablesources, including proxy statements and Form 4 and 8-Kdisclosures, and was not adjusted. The Core Peer Group usedfor 2018 compensation decisions consisted of the companies inthe table below, which includes revenue, asset, and market capThe Core Peer Group is composed of 13 companies with primarydata relevant at the time these companies were relied upon foroperations in the provision of highly technical and professionalmaking the decisions on 2018 compensation.services to the U.S. government and engineering, construction,

Data in billions — as of 12/29/2017

Company Revenues Assets Market Cap

AECOM Technology Corporation(1) $ 18.203 $ 14.397 $ 5.856

Booz Allen Hamilton Holding Corporation(2) $ 5.804 $ 3.373 $ 5.560

CACI International Inc(3) $ 4.355 $ 3.911 $ 3.259

CH2M Hill Companies, Ltd.(4) $ 3.766 $ 2.698 $ —

Chicago Bridge & Iron Company N.V. $ 6.673 $ 5.972 $ 1.637

EMCOR Group, Inc. $ 7.687 $ 3.966 $ 4.808

Fluor Corporation $ 19.521 $ 9.328 $ 7.225

Jacobs Engineering Group Inc.(5) $ 10.023 $ 7.381 $ 7.950

Leidos Holdings, Inc. $ 10.170 $ 8.990 $ 9.768

ManTech International Corporation $ 1.717 $ 1.744 $ 1.295

McDermott International, Inc. $ 2.985 $ 3.223 $ 1.869

Quanta Services, Inc. $ 9.466 $ 6.480 $ 6.051

Science Applications International Corporation(6) $ 4.450 $ 2.042 $ 3.275

Median (including KBR) $ 6.239 $ 3.938 $ 4.042

KBR, INC. $ 4.171(7) $ 3.674 $ 2.778

AECOM Technology Corporation’s Revenues and Assets are as of 9/30/2017 and Market Cap is as of 12/29/2017.(1)Booz Allen Hamilton Holding Corporation’s Revenues and Assets are as of 3/31/2017 and Market Cap is as of 12/29/2017.(2)CACI International Inc.’s Revenues and Assets are as of 6/30/2017 and Market Cap is as of 12/29/2017.(3)CH2M Hill Companies, Ltd.’s Revenues and Assets are as of 9/29/2017 (unaudited). CH2M Hill Companies, Ltd.’s Market Cap is not listed above(4)because its stock was not publicly traded. Jacobs Engineering Group Inc.’s Revenues and Assets are as of 9/29/2017 and Market Cap is as of 12/29/2017. Jacobs Engineering Group Inc.(5)acquired CH2M Hill Companies, Ltd. via a cash and stock transaction on August 2, 2017, and the acquisition was completed on December 18, 2017.Science Applications International Corporation’s Revenues and Assets are as of 2/3/2017 and Market Cap is as of 12/29/2017.(6)KBR’s revenue does not include our share of revenue from our unconsolidated joint ventures, which was approximately $2.4 billion in 2017.(7)

In addition to publicly-available data for the Core Peer Group, a both the local Houston and the broader market for keysupplemental group of companies was selected to provide management and technical talent. The companies thatadditional data for assessing the competitiveness and comprised the Diversified Peer Group used for 2018reasonableness of our compensation programs for our Named compensation decisions were: AECOM Technology Corporation;Executive Officers. The Diversified Peer Group consisted of 21 Boise Cascade Co; Booz Allen Hamilton Holding Corporation;companies that were participants in the Equilar Executive CH2M Hill Companies, Ltd.; Dover Corporation; EMCOR Group,Compensation Survey (which was used by Meridian to analyze Inc.; Flowserve Corporation; Fluor Corporation; Hubbell Inc.;peer company compensation data that was not publicly Leidos Holdings Inc.; Lennox International Inc.; McDermottavailable), crossing multiple manufacturing and International, Inc.; Meritor Inc.; Newell Rubbermaid Inc.;operations-focused industries of similar size and scope as KBR. Rockwell Collins, Inc.; Stantec Inc.; Terex Corporation; TetraThe companies were generally selected based on company Tech, Inc.; Timken Corporation; Tutor Perini Corporation; andrevenue, size, complexity and performance, and the nature of Visteon Corporation.their principal business operations with specific emphasis onengineering and construction, heavy industrial, manufacturing,and government services. Special consideration was also givento companies based in Houston. The Compensation Committeebelieves the Diversified Peer Group appropriately represents

During 2018, our Compensation Committee asked Meridian toreview the appropriateness of the Core and Diversified PeerGroups used in the assessment of the competitiveness of ourexecutive compensation programs. The review consideredseveral factors relating to the companies in both our Core and




Diversified Peer Groups, including an analysis of certain financialmetrics drawn from the Equilar Executive Compensation Survey(i.e., revenue, net assets, market capitalization, enterprise value,and number of employees), the business strategies of the peergroup companies, the effects of corporate transactions, and theavailability of market data. As a result of the review, effective for2019 compensation decisions, our Compensation Committeeupdated our Core Peer Group by removing CH2M HillCompanies, Ltd. and Chicago Bridge & Iron Company N.V.because they were acquired by Jacobs Engineering Group Inc.and McDermott International, Inc., respectively, and includingVectrus, Inc., a global government services company. Our CorePeer Group for 2019 compensation decisions includes: AECOMTechnology Corporation; Booz Allen Hamilton HoldingCorporation; CACI International Inc.; EMCOR Group, Inc.; FluorCorporation; Jacobs Engineering Group Inc.; Leidos Holdings,Inc.; ManTech International Corporation; McDermottInternational, Inc.; Quanta Services, Inc.; Science ApplicationsInternational Corporation; and Vectrus, Inc. Our CompensationCommittee also made changes to our Diversified Peer Group.The changes to our Diversified Peer Group were made due tosome of our peers not participating in the Equilar ExecutiveCompensation Survey. Our Diversified Peer Group for 2019compensation decisions includes: Boise Cascade Co; Booz AllenHamilton Holding Corporation; Dover Corporation; EMCORGroup, Inc.; Flowserve Corporation; Harris Corporation; HubbellInc.; Huntington Ingalls Industries, Inc.; Leidos Holdings Inc.;Lennox International Inc.; McDermott International, Inc.; MeritorInc.; Quanta Services, Inc.; Science Applications InternationalCorporation; Teradata Corporation; Tetra Tech, Inc.; TimkenCorporation; Unisys Corporation; Visteon Corporation; andWeatherford International plc.

Role of Compensation Committee and CEO

incentives for our Senior Executive Management other thanhimself. Our CEO also:

During 2018, our CEO made recommendations to ourCompensation Committee regarding the compensation and

recommended performance measures, target goals and award●schedules for short-term and long-term incentive awards, andreviewed performance goals for consistency with ourprojected business plan;

reviewed competitive market data for Senior Executive●Management positions; and

developed specific recommendations regarding the amount●and form of equity compensation to be awarded to our SeniorExecutive Management.

Based on the CEO’s recommendations and in concert with him,our Compensation Committee’s role is to annually review andapprove the compensation and incentive awards for our SeniorExecutive Management.

No Significant Changes Made in 2018 to KBR’s Compensation Program In 2017, the Compensation Committee made changes to ourcompensation program to further emphasize the link betweenpay and Company performance. These changes related to theshort-term incentive plan and included the increase of our EPSmetric weighting from 25% to 40%, decrease of the individualKey Performance Indicators (“KPIs”) weighting from 45% to30%, addition of more financially measurable metrics to theKPIs, and CEO's KPIs being based solely on earnings beforeinterest, tax, depreciation and amortization (“EBITDA”) targets.The Compensation Committee believed that the changes madein 2017 strongly reflect our pay for performance strategy.Accordingly, no significant changes were made to ourcompensation program for 2018.

Stockholder Advisory Vote on Compensation We believe we have a well-designed executive compensationprogram. The most recent stockholder advisory proposal onexecutive compensation (“Say-on-Pay Proposal”) waspresented to our stockholders during the Company’s annualmeeting of stockholders on May 16, 2018. At that 2018 annualmeeting, approximately 93% of the votes cast (in person andby proxy) on the Say-on-Pay Proposal were voted in favor ofthe proposal.

Our Compensation Committee considered the results to be anaffirmation of the stockholders’ support of our compensationpolicies and decisions. Our Company maintains a regular dialoguewith our stockholders on a broad range of topics, includinggovernance and executive compensation, and we will continue toconsider the outcome of our Say-on-Pay Proposal when determiningfuture compensation policies and decisions for our NEOs.




Summary of 2018 Compensation to Named Executive Officers

2018 Base Salary and Target Short- and Long-Term Incentives The table below reflects target annual compensation and is not intended to replace the more detailed information provided in theSummary Compensation Table. The target dollar amounts for restricted stock units are rounded to the next whole share upon grant.

2018 Base

Salary

Target 2018Short-Term

Incentive

Target 2018 Long-Term Performance Incentives

Total TargetAmount

Restricted StockUnits Target

Dollar Amount

PerformanceCash Award

Target DollarAmount

Mr. Bradie $ 1,050,000 $ 1,312,500 $ 2,000,000 $ 4,000,000 $ 8,362,500

Mr. Sopp $ 652,800 $ 522,240 $ 333,333 $ 666,667 $ 2,175,040

Mr. Mujib $ 561,000 $ 504,900 $ 466,667 $ 933,333 $ 2,465,900

Mr. Ibrahim $ 519,435 $ 415,548 $ 283,333 $ 566,667 $ 1,784,983

Mr. Mackey $ 500,000 $ 400,000 $ 333,333 $ 666,667 $ 1,900,000

Performance-Based CompensationA significant portion of our NEOs’ target annual compensation in 2018 was performance-based compensation. The following circlecharts show the percentage of our CEO’s and other NEOs’ 2018 total target annual compensation that is performance-basedcompensation and the percentage that is not performance-based compensation. The circle charts reflect target annual compensation,except where actual is noted, and are not intended to replace the more detailed information provided in the Summary CompensationTable. “Other NEOs” includes all NEOs except for the CEO.

63%37% 53%47%

CEO’s Target Annual Compensation Other NEOs’ Target Annual Compensation

Performance-Based Compensation Non-Performance-Based Compensation

Elements of CompensationOur executive compensation program has been designed to determines, at its discretion and business judgment, theensure that KBR is able to attract and retain ideal executives for appropriate level and mix of short-term and long-term incentiveapplicable positions and that its compensation plans support compensation for our Senior Executive NEOs to rewardKBR’s strategies, focus efforts, help achieve business success, near-term superior performance and to encourage commitmentand align with KBR’s stockholders’ interests. There is no to our long-range strategic business goals. To determine thepre-established formula for the allocation between cash and appropriate combination of elements, we consider ournon-cash compensation or short-term and long-term philosophy to condition the majority of Named Executive Officercompensation. Instead, each year our Compensation Committee compensation on Company performance.




As illustrated in the below charts, our 2018 executive compensation program consisted of the following core elements (at target): basesalary, short-term incentives (annual), and long-term incentives. The circle charts are not intended to replace the more detailedinformation provided in the Summary Compensation Table. “Other NEOs” includes all NEOs except the CEO.

In addition to the core elements outlined above, our 2018 executive compensation program included the following supplementalbenefits: severance and change-in-control protection and other generally available benefits, which are not reflected in the circle charts.Each element of our executive compensation program is described below.

A. Base Salary We pay our Senior Executive Management market-competitivebase salaries for the skills and experience necessary to meet therequirements of the executive’s role. To determine base salaryfor our Senior Executive Management, our CompensationCommittee relied primarily on (1) market data for comparablepositions within the Core and Diversified Peer Groups,(2) individual performance, and (3) internal pay equity. In additionto considering market comparisons in making salary decisions,our Compensation Committee exercised discretion andjudgment based on the following factors:

level of responsibility;●experience in current role and equitable compensation●relationships among our executives;

performance and leadership; and●external factors involving competitive positioning, general●economic conditions, and marketplace compensation trends.

No specific formula is applied to determine the weight of eachfactor, and the factors are considered by our CompensationCommittee in its discretion. Salary reviews are conductedannually in which individual performance is evaluated; however,individual salaries are not necessarily adjusted each year. OurCompensation Committee generally established base salaries atcompetitive levels, primarily using the median pay levels ofcomparable positions in the Core and Diversified Peer Groups asreference points.

In 2018, the Compensation Committee made modest increasesto the Named Executive Officers’ base salaries, except for Mr.Mackey. Mr. Mackey, who became our Chief Corporate Officerin December 2016 and whose responsibilities increased withacting as lead director for KBR in our Brown & Root IndustrialServices (“BRIS”) joint venture and managing KBR's InformationTechnology, Real Estate and Travel departments in addition toHuman Resources, received a larger base salary increase, asnoted below.

The following are the base salaries for our Named Executive Officers, effective January 1, 2018:

NameIncrease (% of 2017

Base Salary) 2018 Base Salary Basis for Decision

Mr. Bradie $ 50,000 (5%) $ 1,050,000 Core Peer Group data, performance and first base salary increase since he started with KBR in 2014.

Mr. Sopp $ 12,800 (2%) $ 652,800 Core Peer Group data and performance.

Mr. Mujib $ 11,000 (2%) $ 561,000 Core Peer Group data and performance.

Mr. Ibrahim $ 10,185 (2%) $ 519,435 Core Peer Group data and performance.

Mr. Mackey $ 50,000 (11%) $ 500,000 Diversified Peer Group data, increased responsibilities, and performance.




B. Short-Term Incentives (Annual) Our Compensation Committee established the KBR SeniorExecutive Performance Pay Plan (the “Performance Pay Plan”)to reward Senior Executive Management for improving financialresults for stockholders of KBR and to provide a means to linkcash compensation to KBR’s short-term performance. ThePerformance Pay Plan is a performance program under thestockholder-approved KBR, Inc. 2006 Stock and Incentive Plan,as amended and restated (the “KBR Stock and Incentive Plan”).We provide for short-term incentives in order to motivate andreward achievement of, and performance in excess of, KBR’sannual goals.

In December 2017, our Compensation Committee met todetermine the 2018 target award percentages of base salary forour Named Executive Officers under the Performance Pay Plan.The target award percentages of base salary among our NamedExecutive Officers were generally set to be consistent with themedian target awards of similar positions within our Core andDiversified Peer Groups as provided below. The short-termincentive award opportunities were based on a percentage ofbase salary assuming attainment of specified threshold, target,and maximum performance levels, which were, respectively: (i)for Mr. Bradie, 31.25%, 125%, and 250%; (ii) for Mr. Mujib,22.5%, 90%, and 180%; and (iii) for Messrs. Ibrahim, Mackeyand Sopp, 20%, 80%, and 160%.

Name

Increase to TargetShort-Term Award

% of Base Salary

2018 TargetShort-Term Award

% of Base Salary Basis for Decision

Mr. Bradie 0% 125% Core Peer Group data and performance.

Mr. Sopp 0% 80% Core Peer Group data and internal equity.

Mr. Mujib 0% 90% Core Peer Group data and internal equity.

Mr. Ibrahim 0% 80% Core Peer Group data and internal equity.

Mr. Mackey 0% 80% Diversified Peer Group data and internal equity.

Fiscal year 2018 was the fourth full year after Mr. Bradie’s arrivalat KBR in June 2014 and after the initiation of our strategic planin December 2014. The metrics below reflect the continuedvision and strategy of our Company. The metrics remained thesame as our 2017 short-term incentive plan, which focused ourNEOs on the key measures of success in connection with theexecution of our strategic plan.

In addition, our Compensation Committee took measures toensure that targets remained challenging and competitive. OurCompensation Committee adopted the following performancemetrics (and weightings) for our CEO and other NEOs:

Performance Metric Weighting Rationale

KBR Adjusted EPSMeasures net income divided by the weighted average number of fully diluted Company shares outstanding (excluding adjustments as noted under the section titled “Non-GAAP Reconciliation: Adjusted EBITDA and Adjusted EPS” at the end of this proxy statement).

40% This metric helps to align our NEOs with the interests of our stockholders because strong EPS generally increases the value of our stock. EPS was set at a challenging level given the difficult energy market. Buybacks are considered in reviewing EPS achievement to provide for an accurate comparison against the pre-established target.

KPIsKPIs are individual performance metrics specific to each NEO. For the CEO, the KPIs are solely based on earnings before interest, tax, depreciation and amortization (“EBITDA”). The KPIs for the other NEOs are described on pages 50, 51 and 52.

30% KPIs allow the Company to incentivize individual performance by rewarding individual contributions to KBR’s key strategy focus areas.

KBR Operating Cash Flow (“OCF”)KBR OCF measures the amount of cash generated by KBR’s operations.

20% KBR’s OCF Target is based on its 2018 budgeted Cash Flow from Operations. This metric was aligned with our strategic transformation plan. This metric was established to ensure that our NEOs focus on generating cash flow.




Performance Metric Weighting Rationale

Completed SAFE ToursSAFE (Shaping Accident Free Environments) Tours measure the number of SAFE tours completed by KBR leadership.

5% This is intended to be a forward-looking metric to promote the safety of all Company employees and affiliates. Safety incentives also help reduce costs for the Company. KBR’s 2018 Completed SAFE Tours target number was derived from the goal to have approximately one SAFE tour per week. While we met the maximum SAFE Tours in 2017, we maintained Target at the same level as in 2017 because we believe that by maintaining the target level we emphasize the quality of the tours rather than just the quantity. Threshold is Target minus six, and Maximum is Target plus six. A SAFE Tour is a project, office, or site visit by a NEO where the NEO must ensure implementation of KBR’s Zero Harm 24/7 initiative. The objective of the SAFE Tour is to exhibit visible leadership and commitment to health, safety, security and environment from the highest level of our Company. It requires a significant commitment from each NEO.

KBR Consolidated SafetySafety measures the total recordable incident rate (“TRIR”), which is calculated as the number of recordable incidents for every 200,000 work-hours, for consolidated KBR.

5% This historic metric measures the safety of all Company employees and affiliates. Safety incentives also help reduce costs for the Company.

We believe the above metrics are the most important measures to drive KBR’s growth and to increase our stockholders’ value.

Target Award LevelWhen establishing target levels for the short-term incentiveaward schedule for 2018, the Compensation Committeeconsidered, among other things, projected Companyperformance, strategic business objectives, and forecast generalbusiness and industry conditions. Target award levels generallyreflect the objectives set by our Compensation Committee andare generally intended to approximate the 50th percentile of ourCore Peer Group (using the Diversified Peer Group data foradditional input) for good performance and above the 50thpercentile for consistent, outstanding performance, but ourCompensation Committee also considers other factors as notedearlier in this Compensation Discussion and Analysis. At the timethe target levels are established, the outcome is intended to besubstantially uncertain but achievable and require better thanexpected performance from our NEOs. Our CompensationCommittee adopted target levels for our short-term incentiveaward schedule that maintained the same rigor as theperformance targets from the prior year, especially in light of thechallenging hydrocarbons market.

reconciliation under the section titled “Non-GAAP Reconciliation:EBITDA and Adjusted EPS” at the end of this proxy statement).Our 2018 KBR Adjusted EPS target of $1.42 reflected an 8.4%increase from the adjusted 2017 EPS of $1.31.

For KBR Adjusted EPS, our Compensation Committee set thetarget level at $0.02 above the midpoint of the adjusted EPSguidance of $1.35 to $1.45, which was included in Exhibit 99.1to our Form 8-K filed on February 23, 2018. We considered anadjusted EPS of $1.42 a rigorous target level because our 2017EPS of $3.06 included: non-cash benefits of $1.58 due to thereassessment of a valuation allowance upon achievingcumulative pretax income, $0.13 due to the tax rate changeassociated with the Tax Reform Act, and $0.18 due to aone-time, legacy settlement payment from PEMEX. Excludingthese items, our 2017 adjusted EPS was $1.31 (see

For KBR's Operating Cash Flow (“OCF”), our CompensationCommittee set the target level at 2% above the midpoint of ourOCF guidance of $125MM to $175MM, which was included inExhibit 99.1 to our Form 8-K filed on February 23, 2018. Weconsidered an OCF of $153.1MM to be an appropriate targetlevel given that our 2017 OCF of $193MM included theone-time, legacy settlement payment from PEMEX of $435MM.Excluding the PEMEX settlement, the $153.1MM reflected arigorous goal.

The 2018 target level for the Consolidated Safety TRIRperformance metric was set at .214, which was slightly betterthan the 2017 TRIR result of .215, because with industry-leadingperformance, we adopt a continuous improvement goalphilosophy. As noted in our 2018 proxy statement, we showed a2017 TRIR result of .195 under our 2017 short-term incentive ofaward schedule because the .195 TRIR excluded safetyincidents for the first six months of 2017 that were attributableto Wyle, Inc. and Honeywell Technology Solutions Inc. (“HTSI”),companies we acquired in the third quarter of 2016, to allowmanagement time to implement our Zero Harm program withinthese businesses. Our 2018 target level and result for TRIRunder our 2018 short-term incentive plan included Wyle, Inc. andHTSI incidents.

Our Compensation Committee established the 2018 targetaward levels shown on the next page in the 2018 Short-TermIncentives Table, with actual results and payouts certified inFebruary 2019.




2018 SHORT-TERM INCENTIVES TABLE

Weight Performance Metric Threshold Target Maximum Actual Result Payout

40% KBR Adjusted EPS(1) $1.37 $1.42 $1.47 $1.53 80.0%

20% KBR OCF(2) $114.8MM $153.1MM $191.3MM $164.8MM 26.2%

5% SAFE Tours Completed 49 55 61 63 10.0%

5% Consolidated Safety (TRIR)(3) .229 .214 .199 .168 10.0%

30% KPIs As notedbelow

As notedbelow

TOTAL PAYOUT(4) 126.2%

The 2018 EPS actual result of $1.53 relates to the achieved adjusted EPS for the year. A reconciliation of adjusted EPS to EPS is provided at the end(1)of this proxy statement under the section titled “Non-GAAP Reconciliation: Adjusted EBITDA and Adjusted EPS.”The 2018 OCF actual result of $164.8MM achieved a payout of 26.2%; however, the payout was reduced to 20% to be fiscally conservative(2)because of the acquisition of SGT in April 2018 as described below.The 2018 TRIR actual result of .168 achieved a payout of 10%; however, the payout was reduced to 0% in light of a fatal employee incident as(3)described below. The 2018 TRIR actual result of .168 differs from the 2018 TRIR of .191 illustrated in the “KBR Total Recordable Incident Rate”graphic in the Proxy Summary of this proxy statement under the section titled “Financial Highlights” because the TRIR used to measure theConsolidated Safety TRIR for the 2018 short-term incentive plan excluded the TRIR attributable to Aspire Defence to allow management time toestablish our Zero Harm initiatives and culture within that project following our acquisition of our partner's interest in Aspire Defence in April 2018.The total payout percentage does not include the percentages earned with respect to the KPIs. The final payouts for our CEO and other NEOs are(4)on the following three pages.

Exercise of Negative Discretion for Operating Cash Flow and Consolidated Safety (TRIR) MetricsIn 2018, our OCF was $164.8MM and fell in between our target and to 0% in light of a fatal employee incident. This emphasizes themaximum goals for the OCF performance metric. Using linear importance of safety to KBR and aligns with KBR’s mission tointerpolation, our OCF achieved a result of 131%, which when achieve Zero Harm every day. The 2018 TRIR actual result of .168multiplied by the 20% weighting, resulted in a payout of 26.2%. The differs from the 2018 TRIR of .191 illustrated in the “KBR TotalCompensation Committee exercised negative discretion to reduce Recordable Incident Rate” graphic in the Proxy Summary of thisthe OCF payout from 26.2% to 20% to be fiscally conservative proxy statement under the section titled “Financial Highlights”because of the Company's acquisition of SGT in April 2018. Our TRIR because the TRIR used to measure the Consolidated Safety TRIR forin 2018 was .168 and exceeded our maximum goal for the the 2018 short-term incentive plan excluded the TRIR attributable toConsolidated Safety (TRIR) performance metric. Our TRIR achieved a Aspire Defence to allow management time to establish our Zeroresult of 200%, which when multiplied by the 5% weighting, Harm initiatives and culture within that project following ourresulted in a payout of 10%. The Compensation Committee acquisition of our partner's interest in Aspire Defence in April 2018.exercised negative discretion to reduce the TRIR payout from 10%

KPIs and STI Payout for Mr. BradieMr. Bradie earned 53.25% on his KPIs as provided below:

Weight KPI Threshold Target Maximum Actual Result Payout

15% Grow Technology business (EBITDA) versus 2017.

7% 10% 13% 12% 23.25%

15% Grow Government Services business (EBITDA) (excluding the acquisition of Aspire Defence) versus 2017.

2% 5% 8% 19% 30.00%

KPI PAYOUT 53.25%

Since the most recent decline in the price of a barrel of West an approximately 25% rather than 19% gain from 2017). NotTexas Intermediate crude oil, which dropped from over $100 per only did Mr. Bradie’s efforts help increase our EBITDA for bothbarrel in 2014 to below $50 at the end of 2018, many oil and gas businesses, we saw 10% organic revenue growth in ourcompanies have significantly reduced their capital expenditure Technology business and 17% organic revenue growth in ourbudgets, which has negatively affected KBR’s business. Government Services business. This growth helped KBR’s totalNotwithstanding this continued challenging macro environment fiscal year EBITDA increase from $320MM in 2017 to $504MMin the energy industry, in 2018 Mr. Bradie was able to steer KBR in 2018 (see reconciliation under the section titled “Non-GAAPon a growth trajectory with 12% EBITDA growth in our Reconciliation: EBITDA and Adjusted EPS” at the end of thisTechnology business and 19% EBITDA growth in our proxy statement). In light of these achievements, ourGovernment Services business (excluding the gain from our Compensation Committee believes Mr. Bradie’s KPI resultsacquisition of Aspire Defence, which if included, would result in reflect the appropriate payout for his efforts in 2018.




Mr. Bradie’s performance against his KPIs earned him the following payout:

CEO and Target

STI Payoutper Actual Metrics Results

(excluding KPIs)

Negative Discretionfor Cash Flow

and Safety KPI Payout Final Payout

Mr. BradieTarget 125%

$1,656,375126.20% of target

$(212,625)(16.20%)

$698,90653.25%

$2,142,656163.25% of target

KPIs and STI Payout for Mr. SoppMr. Sopp earned 25.4% on his KPIs as provided below:


10% Demonstrable progress in the expanded accounting improvement plan by reduction of post-closing adjustments in 2018 by at least 30% versus 2017.

$4MM $5MM $6MM $(8MM) 0.0%

10% Decrease in “carry over” un-remediated Sarbanes-Oxley Act deficiencies at year-end 2018 by 50% versus year-end 2017.

29 24 18 18 20.0%

10% Cash Flow: reduce DSO in Government Services U.S. by three days from 2017.

78 74 70 76 5.4%

KPI PAYOUT 25.4%

Given the challenging energy macro environment noted above, our Compensation Committee believes Mr. Sopp’s KPI results reflectthe appropriate payout for his efforts in 2018.

Mr. Sopp’s performance against his KPIs earned him the following payout:

NEO and Target


(excluding KPIs)


and Safety KPI Payout Final Payout

Mr. SoppTarget 80%

$659,067126.20% of target

$(84,603)(16.20%)

$132,64925.40%

$707,113135.40% of target

KPIs and STI Payout for Mr. MujibMr. Mujib earned 10% on his KPIs as provided below:


10% Increase Hydrocarbons Services Americas backlog by $1.5B from December 2017 to December 2018.

$2,091.4MM $2,291.4MM $2,491.4MM $1,249.7MM 0%

10% Ichthys Operating Income, deliver successful start-up and execution and meet Operating Income actuals at or ahead of plan.

$28.1MM $31.2MM $34.3MM $21.7MM 0%

10% Embrace BRIS joint venture as KBR’s maintenance arm (measured via feedback from BRIS management, increased volume of joint KBR/BRIS engagements, and EBITDA performance).

$25.0MM $27.0MM $29.0MM $42.0MM 20%

PRELIMINARY KPI PAYOUT 20%

NEGATIVE KPI DISCRETION (10%)

KPI PAYOUT 10%

The actual result for Mr. Mujib's KPI “Embrace BRIS joint venture as KBR's maintenance arm” was $42.0MM, which exceeded hismaximum goal and achieved a payout of 20%. The Compensation Committee exercised negative discretion to reduce the payout from20% to 10% due to the lack of joint KBR/BRIS engagements.




Mr. Mujib’s performance against his KPIs earned him the following payout:

NEO and Target


(excluding KPIs)


and Safety

KPI Payout(including

Negative KPIDiscretion) Final Payout

Mr. MujibTarget 90%

$637,184126.20% of target

$(81,794)(16.20%)

$50,49010.00%

$605,880120.00% of target

KPIs and STI Payout for Mr. IbrahimMr. Ibrahim earned 29.2% on his KPIs as provided below:


10% Deliver organic growth in Government Services business with successful integration of Aspire Defence and Sigma Bravo.

$103.0MM $114.5MM $125.9MM $134.4MM 20.0%

10% Engineering & Construction major project wins for 2018.

$20.0MM $30.0MM $40.0MM $26.3MM 7.2%

10% Deliver 10% EBITDA organic growth across maintenance portfolio.

$7.0MM $8.2MM $9.0MM $8.1MM 9.2%

PRELIMINARY KPI PAYOUT 36.4%

NEGATIVE KPI DISCRETION (7.2%)

KPI PAYOUT 29.2%

The actual result for Mr. Ibrahim's KPI “Engineering & Construction major project wins for 2018” was $26.3MM, which fell in between histhreshold and target goals and achieved a payout of 7.2%. The Compensation Committee exercised negative discretion to reduce thepayout from 7.2% to 0% because the project wins did not meet the desired specifications.

Mr. Ibrahim’s performance against his KPIs earned him the following payout:

NEO and Target


(excluding KPIs)


and Safety



Mr. IbrahimTarget 80%

$524,422126.20% of target

$(67,319)(16.20%)

$121,34029.20%

$578,443139.20% of target

KPIs and STI Payout for Mr. MackeyMr. Mackey earned 45% on his KPIs as provided below:


10% Deliver BRIS EBITDA on plan for 2018. $25.0MM $27.0MM $29.0MM $42.0MM 20%

10% Five-year Information Technology strategy approved and commenced with actual net reduction in 2018.

$4.0MM $5.0MM $6.0MM $8.6MM 20%

10% UK triennial pension valuation agreed with trustee by end of 2018 within cash flow forecast of annual increase.

$20.0MM $15.0MM $10.0MM $6.3MM 20%

PRELIMINARY KPI PAYOUT 60%

NEGATIVE KPI DISCRETION (15%)

KPI PAYOUT 45%

The actual result for Mr. Mackey's KPI “Five-year Information Technology strategy approved and commenced with actual net reduction in2018” was $8.6MM, which exceeded his maximum goal and achieved a payout of 20%. The Compensation Committee exercised negativediscretion to reduce the payout from 20% to 5% because the progression of the Information Technology strategy was behind schedule.




Mr. Mackey’s performance against his KPIs earned him the following payout:

NEO and Target


(excluding KPIs)

Negative Discretion for Cash Flow

and Safety



Mr. MackeyTarget 80%

$504,800126.20% of target

$(64,800)(16.20%)

$180,00045.00%

$620,000155.00% of target

Changes Made to KBR’s 2019 STI Plan Other Than To the Individual Annual KPIsIn 2019, our Compensation Committee made no changes to the 45% to 30%) are still considered to be aligned with the interests offinancial and safety performance metrics of the STI plan, just as it the Company and our stockholders and the goals are set at rigorousmade no changes to them in 2018, because the changes made in levels. However, the individual KPIs for our CEO and each NEO2017 (such as increasing the EPS performance metric weighting were updated for 2019.from 25% to 40% and decreasing the KPI metric weighting from

C. Long-Term Performance Incentives Under the KBR Stock and Incentive Plan, our CompensationCommittee made the following grants to our Named ExecutiveOfficers in 2018: KBR Long-Term Performance Cash Awards andKBR Restricted Stock Units. A description of the KBR Stock andIncentive Plan, the methodology used by our CompensationCommittee to determine the mix of awards to grant, and the KBRLong-Term Performance Cash Awards and KBR Restricted StockUnits granted under the KBR Stock and Incentive Plan is providedbelow.

Our internal stock award process is designed and administered toprovide equity award grant dates that are prospective and notretrospective, or back-dated. Stock awards approved by ourCompensation Committee are generally effective on the date of themeeting at which the approval occurs. Stock option grants, whenapproved by our Compensation Committee, are never issued withan exercise price below the fair market value of our common stockon the date of grant.

KBR Stock and Incentive PlanWe use long-term performance incentives to achieve the followingobjectives:

reward consistent achievement of value creation and operating●performance goals;

align management’s interests with stockholders’ interests; and●encourage long-term perspectives and commitment.●

Long-term incentives represent the largest component of totalexecutive compensation opportunity for our executives. Webelieve this is appropriate given our belief that executive payshould be closely tied to stockholders’ interests.

The KBR Stock and Incentive Plan provides for a variety of cash andstock-based awards, including nonqualified and incentive stockoptions, restricted stock/units, performance shares/units, stockappreciation rights, and stock value equivalents, also known asphantom stock. The KBR Stock and Incentive Plan allows theCompensation Committee the discretion to select from amongthese types of awards to establish individual long-term incentiveawards. Our Compensation Committee met in December 2017 toreview the amount of shares available under the KBR Stock andIncentive Plan for future stock-based awards and to review theCEO’s recommendations on the value of the long-term incentiveawards to our Senior Executive Management. In addition, theCommittee met in February 2018 to review and approve theamount and appropriate mix of long-term incentive awards to begranted to our Named Executive Officers.

For purposes of establishing the target dollar value of the long-termincentive awards, our Compensation Committee engaged Meridianto review our Named Executive Officers’ long-term incentivecompensation. In February 2018, the Compensation Committeeelected not to increase the long-term incentive target dollar valuesfor our Named Executive Officers, as outlined in the below table:

NameIncrease (% of Target 2017

Long-Term Incentive Award)2018 Long-Term Incentive Target

Dollar Value of Award Basis for Decision

Mr. Bradie $ 0 (0%) $ 6,000,000 Core Peer Group data.

Mr. Sopp $ 0 (0%) $ 1,000,000 Core Peer Group data and internal equity.

Mr. Mujib $ 0 (0%) $ 1,400,000 Core Peer Group data and internal equity.

Mr. Ibrahim $ 0 (0%) $ 850,000 Core Peer Group data and internal equity.

Mr. Mackey $ 0 (0%) $ 1,000,000 Diversified Peer Group data and internal equity.

Using the long-term incentive target dollar value of award for the performance cash awards are directly tied to our stock priceeach Named Executive Officer listed above, our Compensation performance and, therefore, directly to stockholder value. TheCommittee granted our Named Executive Officers a mixture of other 50% of the performance cash awards focus our Named66 ⅔% performance cash awards (based on target value) and Executive Officers to improve job income sold (“JIS”) long term.33 ⅓% restricted stock units under the KBR Stock and Incentive In addition, our restricted stock units are tied directly toPlan. The Committee concluded that this mix of performance stockholder value and provide a significant incentive for ourcash awards and restricted stock units was consistent with the Named Executive Officers to remain with the Company. OurCompany’s pay for performance objectives. Specifically, 50% of Compensation Committee reviewed the mix of equity awards of




our Core Peer Group and Diversified Peer Group. OurCompensation Committee awarded a much higher percentage ofperformance cash awards (66 ⅔%) than either of our peergroups because our Compensation Committee believes thatemphasizing job income sold and sustained TSR is more likely toincrease sustained stockholder value. Our CompensationCommittee decided in 2015 against granting stock options underthe KBR Stock and Incentive Plan because it wanted to addmore emphasis on our performance cash awards tied to ourrelative TSR and JIS and our restricted stock units, which arealigned directly with our stockholders. In addition, stock optionswere no longer as prevalent among our Core Peer Group.

KBR Long-Term Performance Cash Awards

substantially uncertain, but achievable. The KBR Long-TermPerformance Cash Awards may only be paid in cash, whichminimizes stockholder dilution.

The KBR Long-Term Performance Cash Awards are long-termincentive awards designed to provide selected executives withspecified incentive opportunities contingent on the level ofachievement of pre-established corporate performance objectives.When establishing target levels of corporate performance, ourCompensation Committee considered, among other things,projected Company performance, strategic business objectives,and forecast general business and industry conditions. At the timethe target levels were established, the outcome was intended to be

The 2018 KBR Long-Term Performance Cash Awards were grantedto our Named Executive Officers in February 2018. Each KBRLong-Term Performance Cash Award has a target value of $1.00.For the 2018 KBR Long-Term Performance Cash Awards, theCompensation Committee maintained the weightings of the twoperformance measures, TSR and JIS, at 50% each. JIS was movedfrom the short-term annual Performance Pay Plan in 2014 becausethe Compensation Committee believed it was more appropriate tomeasure JIS over a longer, three-year period given the long-termnature of our projects and to focus more weight on it due to theoperational challenges we experienced before our CEO’s tenure.The long-term tracking of JIS ensures that contract amendmentsand scope adjustments (both increases and decreases) arecaptured. Given that winning the right work is one of our keystrategic priorities through which we can create long-term growthand through which we can position KBR for a strong and stablefuture amidst economic volatility, we believe that JIS measuredover three years is an appropriate metric. Because we measure JISover a three-year period, we capture contract adjustments that mayimpact future earnings.

TSR and JIS are measured over a three-year performance period beginning January 1, 2018, and ending December 31, 2020, asindicated below:

Total Stockholder Return (TSR) Job Income Sold (JIS)

TOTAL

AWARDS

PAYOUT+ =%50 %50

DEFINITION DEFINITION

KBR’s average quarterly TSR over the three-year performance period is

compared to the average quarterly TSR of each Company of our TSR Peer Group

over the same period.

JIS is defined as the Company’s and its consolidated subsidiaries’ job income from (i) new projects awarded and (ii) earnings

growth from contract amendments or scope adjustments to existing projects.

OBJECTIVE OBJECTIVE

The objective of this metric is to directly link the payout to KBR’s average TSR

performance relative to its peers, promoting stockholders’ interest.

The objective of this metric is to measure and reward sales performance and

promote growth, which is one of our key strategic priorities.

The Compensation Committee determined the number of KBR Long-Term Performance Cash Award is a means of expressingLong-Term Performance Cash Awards for each Named the value of each award since the number of KBR Long-TermExecutive Officer by multiplying the total long-term incentive Performance Cash Awards was granted based on the total targettarget value by 66 ⅔% and dividing the product by $1.00 (the value of long-term incentive awards. The actual value of a KBRtarget value of each KBR Long-Term Performance Cash Award). Long-Term Performance Cash Award may increase to aThe Compensation Committee established the amount of the maximum of 200% of $1.00, or $2.00, or decrease to belowtotal long-term incentive value as described above in the section threshold to 0% of $1.00, or $0.00. The value of KBR Long-Termtitled “KBR Stock and Incentive Plan.” Our Compensation Performance Cash Awards for performance between thresholdCommittee decided to use $1.00 as the target value for each and target or target and maximum will be calculated using linearKBR Long-Term Performance Cash Award for the purpose of interpolation. A three-year performance award cycle wasadministering and communicating the award to participants. In adopted because of the ability to provide for retention and alignaddition, the use of $1.00 as a target value for each KBR with long-term stockholder returns.




TSR is measured based on a sustained approach rather than acumulative (point-to-point) approach. The CompensationCommittee believes that the cumulative approach to measureTSR did not discern sustained performance over the three-yearperformance period. To measure sustained performance, eachpeer group company’s TSR (measured with a 20-trading-dayaverage price) is calculated every quarter during the three-yearperformance period, and KBR’s average quarterly indexed TSR isranked relative to the average quarterly indexed TSR of KBR’speers. The average TSR for a company for the three-yearperformance period is the sum of the TSRs of the companymeasured at the end of each calendar quarter during thethree-year performance period, divided by 12. The CompensationCommittee believes that the sustained approach is betterbecause it does not overemphasize a single ending point, butrather considers how investors may fare at different points overthe entire three-year performance period.

Our 2018 TSR Peer Group includes: AECOM TechnologyCorporation, Chiyoda Corporation, EMCOR Group, Inc., FluorCorporation, Jacobs Engineering Group Inc., McDermottInternational, Inc., Quanta Services, Inc., and TechnipFMC plc.Our 2018 TSR Peer Group previously included Chicago Bridge &Iron Company N.V.; however this company was removed as aresult of its acquisition by McDermott International, Inc.

The TSR percentage is calculated by subtracting KBR’s TSRranking as compared to the peer group from the total number ofcompanies in the peer group, including KBR, dividing thedifference by the number of companies in the peer groupexcluding KBR, and multiplying the quotient by 100%. Assuminga peer group of nine companies (including KBR but excludingChicago Bridge & Iron Company N.V. as a result of its acquisitionby McDermott International, Inc.), the TSR rankings andcorresponding payout percentages are shown in the table below.

2018 Long-Term Performance Cash Award

TSR Payout

Performance LevelTSR

Ranking Percentile Payout

Maximum 1 100.0% 200.0%

2 87.5% 193.8%

3 75.0% 162.5%

4 62.5% 131.3%

Target 5 50.0% 100.0%

6 37.5% 68.8%

Threshold 7 25.0% 37.5%

8 12.5% 0.0%

9 0.0% 0.0%

After the end of each performance award cycle, ourCompensation Committee will determine the extent to whichthe performance goals have been achieved, and the amount ofthe performance award attributable to the TSR performancemeasure will be computed for each selected executive inaccordance with the table above. For a result between thresholdand target or target and maximum, the Performance Percentageearned is determined by linear interpolation between thresholdand maximum based on the result achieved for the TSRperformance measure.

50%. For the second and third years in the JIS performanceperiod, the Compensation Committee will set the JIS target toensure that it remains rigorous. The Compensation Committeedecided to establish the JIS Target one year at a time due to theinability to forecast JIS beyond one year in the challenginghydrocarbons market. No award will be paid for JIS under theKBR Long-Term Performance Cash Awards until after the end ofthe three-year performance period when the average JIS earnedwill be calculated using the average JIS percentage achievedduring each year in the three-year performance period.

The remaining 50% of the KBR Long-Term Performance CashAwards will be determined based on JIS over the samethree-year performance period. JIS is the Company’s and itsconsolidated subsidiaries’ job income from (i) new projectsawarded and (ii) earnings changes from contract amendments(increases or decreases), or scope adjustments (increases ordecreases) to existing projects. JIS is calculated as the averageof the achievement levels of the JIS performance metric foreach year during the three-year performance period. For 2018,Target JIS was $585MM, Maximum JIS was approximately125% of Target, and Threshold JIS was approximately 75% ofTarget. Like the TSR portion of the 2018 KBR Long-TermPerformance Cash Awards, achievement of Threshold pays outat 25%, Target at 100%, and Maximum at 200%, all weighted

In addition to the TSR and JIS performance measures, 20% ofthe KBR Long-Term Performance Cash Awards payout wassubject to forfeiture on December 31, 2018, in the discretion ofour Compensation Committee if it determined that 2018 was nota successful year for us. The 20% metric applied to the totalKBR Long-Term Performance Cash Award granted in 2018. The20% was a one-time threshold to be applied in 2018 only withpermanent forfeiture if the Compensation Committee decidedthat 2018 was not a successful year on or beforeMarch 31, 2019. The 20% could not be earned back during thesecond and third years of the three-year performance period. Inaddition, there was no upside with the 20% metric. In 2018, thismetric goal was met as the Compensation Committeedetermined that 2018 was a successful year for us and,accordingly, it did not exercise its discretion to cause a forfeitureof 20% of the award. Our Compensation Committee added thismeasure to allow the Compensation Committee to forfeit 20%of the KBR Long-Term Performance Cash Awards if the year didnot perform as well as expected. In addition, the KBR Long-TermPerformance Cash Awards that were granted to our NEOs in2018 provide our Compensation Committee with the discretionto reduce, but not increase, by any amount (including a reductionresulting in no payout) the potential payments that wouldotherwise be made with respect to such awards based on theactual level of performance achieved during the performanceperiod. This negative discretion may be exercised by theCompensation Committee at any time prior to the date ofpayment with respect to the award, except that it may not beexercised following the occurrence of a corporate change (asdefined in the KBR Stock and Incentive Plan).




In February 2019, our Compensation Committee certified the January 1, 2016, to December 31, 2018, performance period andresults for the KBR Long-Term Performance Cash Awards that amounts actually paid for each of our Named Executive Officers.were granted on March 1, 2016, which were based on TSR and Mr. Sopp did not participate because he was not an employee ofJIS performance measures. The following table is a summary of the Company when the 2016 KBR Long-Term Performance Cashthe 2016 KBR Long-Term Performance Cash Awards for the Award was granted.

Payout Table for 2016-2018 KBR Long-Term Performance Cash Award Period

2016 Long-Term Incentive Payout Total Stockholder Return Job Income Sold

Named Executive Officer

Target($)

Max($)

ActualPayout

($)Target

(%)Max(%)

Actual(% rank)

ActualPayout

(%)

ActualTSR

Payout($)

Target(Avg $2016-2018)

Max(Avg $2016-2018)

Actual(Avg $2016-2018)

ActualPayout

(%)

ActualJIS

Payout($)

Mr. Bradie 3,666,667 7,333,334 3,289,000 50 100 14.3 0 0 438.8MM 561.7MM 548.1MM 89.7 3,289,000

Mr. Mujib 933,333 1,866,666 837,200 50 100 14.3 0 0 438.8MM 561.7MM 548.1MM 89.7 837,200

Mr. Ibrahim 500,000 1,000,000 448,500 50 100 14.3 0 0 438.8MM 561.7MM 548.1MM 89.7 448,500

Mr. Mackey 600,000 1,200,000 538,200 50 100 14.3 0 0 438.8MM 561.7MM 548.1MM 89.7 538,200

For the 2016 KBR Long-Term Performance Cash Awards, a TSRranking below the 20th percentile results in zero payout, a ranking inthe target 50th percentile results in target payout of 100%, and aranking in the maximum 100th percentile results in a maximumpayout. Therefore, the ranking of 14.3 percentile resulted in a 0%payout of 100% as the ranking was below the threshold for TSR.

For JIS the 2016 JIS payout ratio was above target at 184%, the2017 JIS payout ratio exceeded the maximum, resulting in a 200%payout, and the 2018 JIS payout ratio was above target at 154%.The average JIS for the three-year performance period startingJanuary 1, 2016, and ending on December 31, 2018, resulted in aJIS payout of 179.3%.

Based on the weighting of 50% for TSR and JIS, the total payoutratio for the 2016 KBR Long-Term Performance Cash Awards is89.7% of target.

KBR Restricted Stock Units During 2018, our Compensation Committee granted our NamedExecutive Officers restricted stock units that are subject to athree-year graded vesting schedule, based on service with theCompany. In addition, dividend equivalents are paid on restrictedstock units at the same time dividends are paid to commonstockholders. The Compensation Committee determined thenumber of restricted stock units for each Named Executive Officerby multiplying the total long-term incentive target value by 33 ⅓%and dividing the product by the closing price of our common stockon the date of grant. The Compensation Committee established theamount of the total long-term incentive value as described above inthe section titled “KBR Stock and Incentive Plan.” TheCompensation Committee selected a three-year vesting scheduleto facilitate retention and provide incentives to enhance long-termvalue. The three-year schedule meets the minimum vesting periodgenerally mandated in the KBR Stock and Incentive Plan (other thanwith respect to a small, limited number of awards) for grants ofrestricted stock units.

subject to forfeiture on December 31, 2018, in the discretion ofour Compensation Committee if it determined on or before thefirst anniversary of the date of grant that 2018 was not asuccessful year for us. Our Compensation Committee added thismeasure to allow the Compensation Committee to forfeit 20%of the restricted stock units if the year did not perform as well asexpected. The metric was a one-time metric that if not satisfiedat the end of 2018 would result in the permanent forfeiture of20% of the restricted stock units. In 2018, this metric was metas the Compensation Committee determined that 2018 was asuccessful year for us and, accordingly, it did not exercise itsdiscretion to cause a forfeiture of the restricted stock units.

In addition to the service requirement for vesting of therestricted stock units, 20% of the restricted stock units were

In addition to the above, our CEO continued to hold hisperformance restricted stock units granted in 2014. In June 2018,our CEO earned 100% of his July 2014 performance restrictedstock units that were scheduled to vest in June 2018. This wasthe first earned vesting following three years of forfeitures, asshown below:




Other Compensation Elements

Nonqualified Deferred Compensation We maintain the following active nonqualified deferredcompensation plans in which one or more of our NamedExecutive Officers participate: (1) KBR Elective Deferral Plan and(2) KBR Benefit Restoration Plan. Our Compensation Committeeapproved these plans in April 2007 in order to provide acontinuation of benefits to our employees who were entitled tosuch benefits under our prior parent’s nonqualified plans. Both ofthese plans are available to all KBR employees who meet thelimits imposed by the Internal Revenue Code or the EmployeeRetirement Income Security Act. Our Compensation Committeecontinues to maintain these plans because they are offered bymany of the companies in our Core Peer Group.

KBR Elective Deferral Plan

KBR Elective Deferral Plan. Deferrals are entirely employeefunded. Benefits under this plan are payable upon a terminationof employment (or a specified future date).

Our Named Executive Officers may participate in the KBRElective Deferral Plan, a nonqualified deferred compensationplan, to meet their retirement and other future income needs.No Company contributions are made to fund deferrals to the

KBR Benefit Restoration Plan Our Named Executive Officers may participate in the KBRBenefit Restoration Plan, a nonqualified plan that provides avehicle to restore qualified plan benefits that are reducedbecause of limitations imposed under the Internal Revenue Codeor due to participation in other Company sponsored plans.Benefits under this plan are payable upon a termination ofemployment.

Defined Benefit Pension Plan Our Named Executive Officers do not participate in any KBRsponsored defined benefit pension plans.

Severance and Change-in-Control Protection Since 2008, our Compensation Committee has offered certainmembers of our Senior Executive Management a severance andchange-in-control agreement (the “Agreement”) with theCompany for several reasons. Providing termination benefitsunder a severance and change-in-control agreement allows theCompany to be competitive with the practices of its Core PeerGroup as well as the general market. Also, the specific terms forreceiving termination benefits under the Agreement provide ameans to motivate and retain key employees of the Company.Non-competition and clawback provisions provide protection forthe Company by ensuring that the Company’s trade secrets andconfidential information are safeguarded and that the Companyretains rights to recover any termination benefits paid in theevent of material evidence of an executive’s malfeasance. Inaddition, the Compensation Committee elected for theAgreement to require a double-trigger change-in-controltermination (i.e., the occurrence of both a change-in-control anda termination of employment within two years following thechange-in-control event) in order for an executive to receivechange-in-control benefits. In March 2009, our CompensationCommittee publicly committed to rejecting any proposals thatrequest new excise tax gross-ups. Our CompensationCommittee reconfirms that commitment, which is evidenced byeach new Agreement we have entered into since March 2009,none of which have provided an excise tax gross-up. None of ourNEOs’ Agreements contain an excise tax gross-up.

incentivize them to leave their former employer and join theCompany. The Agreement will terminate automatically onthe earlier of (i) the executive’s termination of employment withthe Company or (ii) in the event of a change-in-control duringthe term of the Agreement, two years following thechange-in-control. The Agreement provides for (i) severancetermination benefits (prior to a change-in-control), which forsome members of Senior Executive Management, includingMessrs. Mackey and Sopp, are graded based on service timewith the Company, (ii) double-trigger change-in-controltermination benefits (on or after a change-in-control), and(iii) death, disability, and retirement benefits. As a condition ofreceipt of these benefits (other than the death and disabilitybenefits), the executives must first execute a release and fullsettlement agreement. The Agreement contains customaryconfidentiality, non-competition, and non-solicitation covenants,as well as a mandatory arbitration provision. In addition, theAgreement contains a clawback provision that allows theCompany to recover any benefits paid under the Agreement ifthe Company determines within two years after the executive’stermination of employment that his employment could havebeen terminated for cause as defined within the Agreement. TheAgreement provides that all unvested stock options, stockappreciation rights, restricted stock, restricted stock units, andperformance cash awards granted to the executive by theCompany will be forfeited upon severance. Such awards,however, will fully vest upon a double-trigger change-in-controlThe Compensation Committee offered the Agreement totermination. The terms of the Agreements for each NEO areMr. Mujib in February 2013, Mr. Bradie in June 2014, Mr.further described and quantified below in the section titledMackey in January 2015, Mr. Ibrahim in May 2015, and Mr. Sopp“2018 Potential Payments Upon Termination orin February 2017 because each of our other members of SeniorChange-in-Control” and “Severance and Change-in-ControlExecutive Management at those times had an Agreement or toAgreements.”




Other Benefits Generally, our Named Executive Officers participate in the sameretirement and health and welfare programs as our otheremployees. In 2018, our Named Executive Officers participatedin the Company’s 401(k) plan. Pursuant to this plan, we madeemployer matching contributions equal to 5.5% of eligiblecompensation. Their health care and insurance coverage is thesame as that provided to other active employees, except thatthe Named Executive Officers are eligible to receive anexecutive physical. Executives are provided physicals as part ofour Zero Harm initiative.

Our Compensation Committee generally does not offerperquisites to our Named Executive Officers, unless generallyavailable to other Company employees. Our executives do nothave company cars or car allowances, housing, or travelallowances, except in the case of relocation-related travel,housing, and car allowances.

To allow for maximum efficiency and productive use of time, oneCompany-leased car and a driver is provided in Houston for useby our Named Executive Officers and others for businesspurposes, except that our Named Executive Officers may usethe Company-leased car and a driver for limited personaluse only if the car is not being used by another Named ExecutiveOfficer for business purposes at that time. In addition, NamedExecutive Officers are eligible to receive limited financialplanning advice.

In connection with his international assignment, Mr. Ibrahimreceived the standard allowances for a car, housing, school, andrelocation costs. In addition, Mr. Ibrahim was included in ourstandard tax equalization program.

Impact of Executive Conduct or a Restatement of Earnings on Compensation (Clawback Policy)If we determine at any time within two years after thetermination of employment of a Named Executive Officer thatsuch senior executive’s employment could have beenterminated for Cause, as defined in the senior executive’sAgreement, we retain the right to recover any severancebenefits (both cash and equity) provided under the Agreement tosuch senior executive. In such case, the senior executive agreesto promptly repay such amounts to us.

In addition, our Company’s cash and equity incentive programsallow the Compensation Committee to seek recovery of anyincentives that are determined to be an overpayment due to anyrestatement of our financial results that impact the performancemetrics on which the incentive awards were calculated. TheCompensation Committee will adopt all clawback provisionsrequired by the Dodd-Frank Act.

Impact of Accounting, Regulatory, and Tax Requirements on CompensationWe apply the fair value recognition provisions of FinancialAccounting Standards Board (“FASB”) Accounting StandardsCodification (“ASC”) 718-10 for share-based payments toaccount for and report equity-based compensation. FASB ASC718-10 requires equity-based compensation expense to bemeasured based on the grant-date fair value of the award. Forperformance-based awards, compensation expense is measuredbased on the grant-date fair value of the award and the fair valueof that award is re-measured subsequently at each reportingdate through the settlement date. Changes in fair value duringthe requisite service period or the vesting period are recognizedas compensation cost on a straight line basis over that period.Compensation expense was recognized for restricted stockunit awards.

benefits) are classified as addition to paid-in-capital, and cashretained as a result of these excess tax benefits is presented inthe statement of cash flows as financing cash inflows.

In the years when we grant stock option awards, the grant-datefair value of employee share options is estimated usingoption-pricing models. If an award is modified after the grantdate, incremental compensation cost is recognized immediatelybefore the modification. The benefits of tax deductions in excessof the compensation cost recognized for the options (excess tax

We carefully review and take into account current tax regulationsas they relate to the design of our compensation programs andrelated decisions. Prior to the enactment of tax reform legislationsigned into law on December 22, 2017, which was originallyknown as the Tax Cuts and Jobs Act (the “TCJA”), Section162(m) of the Internal Revenue Code limited a company’s abilityto deduct compensation paid in excess of $1 million during anyfiscal year to each of certain named executive officers, unlessthe compensation was performance-based as defined underfederal tax laws. Subject to certain transitional rules, the TCJAhas repealed the exemption for performance-basedcompensation from the deduction limitation of Section 162(m) ofthe Internal Revenue Code for taxable years beginning after2017. Our Compensation Committee historically reviewed andconsidered the deductibility of our executive compensationprograms and provided compensation that was not fullydeductible when necessary to retain and motivate certain




executive officers and when it was in the best interest of theCompany and our stockholders. To the extent compensatoryawards are not covered by the transitional rules, theperformance-based exception to the deduction limitation underSection 162(m) of the Internal Revenue Code will no longer beavailable to the Company and annual compensation paid to ourcovered executives in excess of $1 million will not be deductible.

executives where the payment was predicated upon theachievement of certain financial results that were subsequentlythe subject of restatement.

Section 304 of the Sarbanes-Oxley Act of 2002 applies to anycash or equity-based incentive compensation paid to specified

We are administering all nonqualified, deferred compensationplans and payouts applicable to our Named Executive Officerswith the intent to be exempt from, or in compliance with, theprovisions of Section 409A of the Internal Revenue Code addedunder the American Jobs Creation Act of 2004.

Stock Ownership Guidelines for OfficersThe Nominating and Corporate Governance Committee of ourBoard of Directors determined that we should establish stockownership guidelines for certain of our officers and officers ofour subsidiaries in an effort to link more closely the financialinterests of these officers with those of our stockholders.

Our Board of Directors adopted the following ownershipguidelines for our common stock, $0.001 par value (“CommonStock”), for the officers at the levels indicated below:

Group Ownership Level

CEO 5x base salary

Level 1 Executives(Direct reports to CEO) 3x base salary

Level 2 Executives(Direct reports to Level 1 Executives and at least a vice president) 1x base salary

Our Board of Directors approved that: (a) each such officer will value of shares of Common Stock is determined as the closinghave five years after the adoption of these guidelines or his or price of the Common Stock for the particular date; and (e) on andher appointment to an applicable office, whichever is later, to after each officer’s 60th birthday, the officer’s required ownershipachieve the indicated ownership level; (b) all beneficially owned level is reduced to fifty percent (50%) of the ownership levelshares of Common Stock and vested and unvested restricted provided for above; provided, however, no such adjustment willstock and restricted stock units are counted towards be made for the ownership levels of the CEO, Chief Operatingachievement of the ownership guideline; (c) once an officer has Officer (if any), CFO, and General Counsel. All of our Namedachieved the applicable level of Common Stock ownership he or Executive Officers meet our Stock Ownership Guidelines or areshe is not required to retain or purchase additional shares if a on track to meet the guidelines within the five-year perioddecline in the price for the Common Stock causes his or her described above.holdings to be less than the applicable ownership level; (d) the

No PledgingOur Board of Directors approved as part of the stock ownership guidelines above that no officer of the Company may pledge,hypothecate, create any lien or security interest on, or enter into a margin contract secured by, any shares, options to purchase shares,or any other interest in shares of Common Stock.

Minimum Holding Period for Restricted Stock Units and Stock OptionsOur Compensation Committee has reviewed whether to adopt a holding period for our restricted stock units and stock options. TheCompensation Committee has elected not to adopt a minimum holding period because we have (i) strong stock ownership guidelinesand (ii) adopted a long vesting schedule for our restricted stock units.




Anti-Hedging PolicyOur anti-hedging policy prohibits all members of our Board of Directors, employees, and agents from (i) speculative trading in oursecurities; (ii) engaging in hedging transactions using our securities; (iii) ”short selling” our securities; and (iv) trading derivativesecurities, such as put options, call options, swaps, or collars related to our securities.

ConclusionIn a highly competitive market for executive talent, we believe performance, and permit the exercise of our Compensationour customers’ and employees’ interests, as well as those of our Committee’s discretion in the design and implementation ofstockholders and other stakeholders, are well served by our compensation packages. Going forward, we will continue tocompensation programs. These programs are reasonably review our compensation plans periodically to determine whatpositioned among our Core Peer Group, encourage and promote revisions, if any, should be made.our compensation objectives with a strong emphasis on pay for



Compensation Committee Report

Compensation Committee ReportThe foregoing report of the Compensation Committee shall notbe deemed to be “soliciting material” or to otherwise beconsidered “filed” with the SEC, nor shall such information beincorporated by reference into any future filing under theSecurities Act of 1933 or the Securities Exchange Act of 1934,except to the extent that the Company specifically incorporatesit by reference into such filing.

The Compensation Committee has reviewed and discussed theCompensation Discussion and Analysis, as provided above, withKBR’s management. Based on its review, the CompensationCommittee recommended to the Board of Directors that theCompensation Discussion and Analysis be included in this proxystatement. Respectfully submitted,

The Compensation Committee of Directors

Jack B. Moore, ChairmanJames R. BlackwellLester L. LylesUmberto della Sala

March 20, 2019

Compensation Committee Interlocks and Insider ParticipationAs of the date of this proxy statement, our Compensation Committee consists of Messrs. Moore, Blackwell, Lyles, and della Sala, allof whom are independent, non-executive directors. None of our Compensation Committee members has served as an officer oremployee of KBR. Further, none of KBR’s executive officers has served as a member of a board of directors or compensationcommittee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of KBR.


Part Three

Executive Compensation

Executive Compensation 62Summary Compensation 62

Grants of Plan-Based Awards 64

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table 65

Severance and Change-in-Control Agreements 72

No Employment Agreements 74

CEO Pay Ratio 74

Director Compensation 76

Certain Relationships and Related Transactions 78

Related Person Policies 78

Section 16(a) Beneficial Ownership Reporting Compliance 78

Proposal No. 2 - Advisory Vote to Approve Named Executive Officer Compensation 79Executive Compensation 79





Summary CompensationThe following table sets forth information regarding the compensation of our Named Executive Officers for the fiscal year endedDecember 31, 2018, and, if the individual was a NEO for the applicable fiscal year, for the fiscal years ended December 31, 2017,and 2016.

Name and Principal Position Year

Salary($)(1)

Bonus($)

StockAwards

($)(2)(3)

OptionAwards

($)(2)(3)

Non-EquityIncentive PlanCompensation

($)(4)

Change inPension

Value andNonqualified

DeferredCompensation

Earnings($)(5)

All OtherCompensation

($)(6)Total

($)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Stuart J. B. BradiePresident & CEO

2018 1,049,064 — 3,038,000 — 5,431,657 4,245 72,490 9,595,456

2017 1,000,022 — 3,458,010 — 4,793,500 2,717 63,814 9,318,063

2016 1,000,022 — 2,276,270 — 625,000 2,307 66,042(7) 3,969,641(7)

Mark W. Sopp(8)

EVP & CFO2018 652,562 — 506,347 — 707,113 449 37,599 1,904,070

2017 534,167 — 876,349 — 844,800 — 119,573 2,374,889

Farhan MujibPresident — Delivery Solutions

2018 562,921 — 708,879 — 1,443,080 622 44,903 2,760,405

2017 547,899 — 806,870 — 1,498,950 152 118,283 2,972,154

2016 499,502 — 579,424 — 297,000 171 65,785 1,441,882

J. Jay IbrahimPresident — Energy Services

2018 518,421 — 430,397 — 1,026,943 802 331,252 2,307,815

2017 506,935 — 489,896 — 1,060,155 311 312,509 2,369,806

2016 447,706 — 310,404 — 163,688 118 260,770 1,182,686

Ian. J. MackeyEVP & Chief Corporate Officer

2018 499,050 — 506,347 — 1,158,200 787 35,000 2,199,384

Salary equals base pay paid to each Named Executive Officer during the applicable year, including any elective deferrals into the Kellogg Brown &(1)Root, Inc. Retirement and Savings Plan or the KBR Elective Deferral Plan. The actual salary paid may fluctuate due to the timing of payrollprocessing at each calendar-year end. With respect to Mr. Mujib, a portion of his 2017 salary, which should have been paid in 2017, was paid in2018, due to a timesheet error, which is why his 2018 salary in column (c) exceeds his approved 2018 base pay of $561,000.The amounts in columns (e) and (f) represent the aggregate grant date fair value of awards granted in 2016, 2017, and 2018, pursuant to the KBR(2)Stock and Incentive Plan. The fair values were determined in accordance with FASB ASC 718, “Stock Compensation.” Assumptions used in thecalculation of these amounts are described in note 1 under “Description of Company and Significant Accounting Policies” and note 21 under“Share-based Compensation and Incentive Plans” of our audited financial statements included in our annual report on Form 10-K for the yearended December 31, 2018, and the comparable disclosures in 2016 and 2017.With respect to the performance cash awards granted in 2016, 2017 and 2018, which are based 50% on TSR, and to that extent are included in(3)the value of stock awards in column (e), the assumptions assume the probable outcome of the TSR performance condition, which is computed inaccordance with FASB ASC 718 (excluding the effect of estimated forfeitures). At maximum performance, each performance award unit reportedin column (e) would be equal to $2.00. This would give (i) Mr. Bradie a stock awards value under column (e) of $6,000,000 in 2018, $6,000,010 in2017, and $5,500,005 in 2016; (ii) Mr. Sopp a stock awards value under column (e) of $1,000,013 in 2018 and $1,300,016 in 2017, whichcomprises $1,000,000 for his annual award and $300,016 for his sign-on award; (iii) Mr. Mujib a stock awards value under column (e) of$1,400,012 in 2018, $1,400,003 in 2017, and $1,400,014 in 2016; (iv) Mr. Ibrahim a stock awards value under column (e) of $850,014 in 2018,$850,013 in 2017, and $750,004 in 2016; and (v) Mr. Mackey a stock awards value under column (e) of $1,000,013 in 2018.Amounts reportable in column (g) relate to (i) payments under our KBR Senior Executive Performance Pay Plan for 2018, 2017, and 2016; and (ii)(4)payments related to the 50% portion of the 2016 performance cash awards that is based on the JIS performance measure and which weregranted under our KBR 2006 Stock Incentive Plan. Benefits under our KBR Senior Executive Performance Pay Plan and the KBR 2006 StockIncentive Plan are payable by their terms during the first quarter of the following year.




The amounts shown in column (h) include the following:(5)

Name Year Benefit Restoration Total(A)

Bradie 2018 4,245 4,245

2017 2,717 2,717

2016 2,307 2,307

Sopp 2018 449 449

2017 — —

Mujib 2018 622 622

2017 152 152

2016 171 171

Ibrahim 2018 802 802

2017 311 311

2016 118 118

Mackey 2018 787 787

Any amounts reportable here and in column (h) of the Summary Compensation Table are payable in connection with KBR’s nonqualified deferred compensation plans,(A)including the KBR Benefit Restoration Plan (“Benefit Restoration”). These amounts reflect above-market or preferential earnings on nonqualified deferred compensation.

The amounts shown in column (i) above include the following:(6)

Name Year

CompanyRetirement

PlanMatch

BenefitRestoration

Award(A)

Goods &Services

Differ-ential(B)

HousingAllowance(C)

CompanyCar(D)

RelocationCosts(E)

SchoolFees(F)

StandardTax

Equalization(G) Travel(H)Executive

Physicals(I)

FinancialPlanning/Tax

PreparationFees(J) Total

Bradie 2018 15,125 42,574 — — 490 — — — 862 — 13,439 72,490

2017 14,850 40,151 — — 317 — — — 1,807 2,150 4,539 63,814

2016 14,575 45,290 — — 651 — — — 1,186 2,150 2,190 66,042(K)

Sopp 2018 15,125 20,766 — — — — — — 1,708 — — 37,599

2017 14,850 — — — 100,000 — — 2,573 2,150 — 119,573

Mujib 2018 15,125 15,836 — — — — — 9,049 1,914 — 2,979 44,903

2017 14,850 15,284 — 33,232 — 36,666 — — 11,804 2,150 4,297 118,283

2016 30,510 — 13,556 15,515 — — 1,647 — 996 3,561 65,785

Ibrahim(L) 2018 15,125 13,388 55,478 99,646 15,845 — 14,933 93,524 21,508 — 1,805 331,252

2017 14,850 13,031 48,342 102,605 15,846 — — 90,762 22,794 2,150 2,129 312,509

2016 14,575 11,353 38,946 91,982 14,627 — 40,485 27,611 17,416 2,150 1,625 260,770

Mackey 2018 15,125 12,323 — — — — — — 811 2,150 4,591 35,000

The amounts for Messrs. Bradie and Ibrahim in this column for 2016 and 2017 were adjusted after further review to reflect their actual amounts received.(A)The amount for Mr. Ibrahim in this column represents a goods and services differential, to compensate him for the higher cost of goods and services in his(B)expatriate assignment location versus the cost for the same goods and services in his home country, and is consistent with the Company’s standardexpatriate policies. As per the Company’s policy, differentials are determined by Mercer, a third-party consultant. The amounts in this column for 2016 and2017 were previously reported under column (e) and adjusted after further review to reflect the actual benefit he received.The amounts in this column represent housing allowances provided to Mr. Mujib, until June 30, 2017, in connection with his relocation to the United States in(C)October 2016 to assume his new role and Mr. Ibrahim in connection with his international assignment, which is consistent with the Company’s standard KBRRelocation Policy offered to all employees who receive a relocation package.The amounts in this column represent: (i) costs for Mr. Bradie’s personal use of the Company-leased car and driver; (ii) Mr. Mujib’s car allowance received during(D)his international assignment in the United Kingdom from January 1, 2016, through September 30, 2016, and his six-month car lease to assist with his relocationto the United States in October 2016 to assume his new role; and (iii) Mr. Ibrahim’s car allowance in connection with his international assignment. The amount inthis column of Mr. Mujib’s car allowance received during his employment in the United Kingdom, which was provided under the UK car allowance policy offeredto all similarly situated employees, was converted from British Pounds to U.S. Dollars using the exchange rate applicable for the month paid.The amounts in this column represent closing and/or other relocation costs in connection with Messrs. Sopp’s and Mujib’s business-related relocations, which(E)are consistent with the Company’s standard KBR Relocation Policy offered to all employees who receive a relocation package Messrs. Sopp and Mujib did notreceive any home-loss buyout protection in connection with their relocations. The relocation payments are one-time and limited in duration.The amounts in this column represent school fees paid by the Company for Mr. Ibrahim’s dependents in connection with his international assignment. The(F)amount in this column for 2016 for Mr. Ibrahim’s dependents’ school fees was converted from United Arab Emirates Dollars to U.S. Dollars using theexchange rate applicable for the month paid, which was 0.27226. In 2017, Mr. Ibrahim elected not to be reimbursed for the school fees paid for hisdependents, because his business was not doing as well as expected. The tax equalization relates to the payment of the taxes associated with Messrs. Mujib’s and Ibrahim’s international assignment, which is consistent with the(G)Company’s standard KBR Relocation Policy that is offered to all employees who receive a relocation package. The amount in this column for Mr. Mujib’s taxequalization for 2018 relates to the final tax equalization calculation for his assignment in the U.K. until September 2016, which was finalized in 2018. The travel payments for Messrs. Bradie, Sopp and Mackey relate to spousal travel for a business trip. The travel expenses for Mr. Mujib relate to payments in(H)2017 for his dependents to travel between the United Kingdom and Houston, Texas to assist with his international relocation, and spousal travel for abusiness trip in 2018. The travel expenses for Mr. Ibrahim relates to travel by him and/or his dependents to assist with his international assignment, which isconsistent with the Company’s standard KBR Relocation Policy offered to all employees who receive a relocation package.




The amounts in this column represent costs for executive physicals offered by the Company. The Company believes the health of its leadership impacts how(I)it delivers for the organization. Taking a proactive approach to health and wellness with a focus on prevention is in alignment with the Company’s Zero Harmand Wellness Program initiatives and ensures business stability.The amounts in this column represent cost for assistance with Messrs. Bradie’s, Mujib’s, Ibrahim’s and Mackey’s tax returns. The tax preparation fees for(J)Mr. Bradie relate to service rendered in 2018 for his 2016 tax return of $4,595.85 and for his 2017 tax return of $8,843.60. In 2017, no services were renderedfor Mr. Bradie’s 2016 tax return.The amount in this column for 2016 was adjusted to reflect the mathematically correct amount. (K)The amounts for Mr. Ibrahim in columns B, C, D, F, G and H relate to his expatriate assignment consistent with the Company’s standard expatriate policies.(L)

The amounts in these columns were adjusted to reflect the mathematically correct amount. (7)Mr. Sopp became Chief Financial Officer of KBR effective February 28, 2017.(8)

Grants of Plan-Based AwardsThe following table provides information regarding awards in 2018 under the KBR Senior Executive Performance Pay Plan and the KBRStock and Incentive Plan.

NameGrant

Type(1)GrantDate

ApprovalDate

NumberOf

Non-EquityIncentive

Plan UnitsGranted

Estimated Future Payouts Under Non-Equity

Incentive Plan Awards(2)

Estimated Future Payouts Under Equity

Incentive Plan Awards(2)

All OtherStock

Awards:Number

OfShares

OfStock

Or Units(#)(3)

All OtherOption

Awards:Number OfSecurities

UnderlyingOptions

(#)

ExerciseOr BasePrice OfOption

Awards($/Sh)

GrantDate FairValue Of

StockAnd

OptionAwards

($)(4)Threshold

($)Target

($)Maximum

($)Threshold

(#)Target

(#)Maximum

(#)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o)

Stuart J. B. Bradie

STI — — — 328,125 1,312,500 2,625,000 — — — — — — —

PAs-TSR 2/27/2018 2/5/2018 — — — — 500,000 2,000,000 4,000,000 — — — 1,038,000

PAs-JIS 2/27/2018 2/5/2018 2,000,000 500,000 2,000,000 4,000,000 — — — — — — —

RSUs 2/27/2018 2/5/2018 — — — — — — — 128,041 — — 2,000,000

Mark W. Sopp

STI — — — 130,560 522,240 1,044,480 — — — — — — —

PAs-TSR 2/27/2018 2/5/2018 — — — — 83,333 333,333 666,667 — — — 173,000

PAs-JIS 2/27/2018 2/5/2018 333,333 83,333 333,333 666,667 — — — — — — —

RSUs 2/27/2018 2/5/2018 — — — — — — — 21,341 — — 333,346

Farhan Mujib

STI — — — 126,225 504,900 1,009,800 — — — — — — —

PAs-TSR 2/27/2018 2/5/2018 — — — — 116,667 466,667 933,333 — — — 242,200

PAs-JIS 2/27/2018 2/5/2018 466,667 116,667 466,667 933,333 — — — — — — —

RSUs 2/27/2018 2/5/2018 — — — — — — — 29,877 — — 466,679

J. Jay Ibrahim

STI — — — 103,887 415,548 831,096 — — — — — — —

PAs-TSR 2/27/2018 2/5/2018 — — — — 70,833 283,333 566,667 — — — 147,050

PAs-JIS 2/27/2018 2/5/2018 283,333 70,833 283,333 566,667 — — — — — — —

RSUs 2/27/2018 2/5/2018 — — — — — — — 18,140 — — 283,347

Ian J. Mackey

STI — — — 100,000 400,000 800,000 — — — — — — —

PAs-TSR 2/27/2018 2/5/2018 — — — — 83,333 333,333 666,667 — — — 173,000

PAs-JIS 2/27/2018 2/5/2018 333,333 83,333 333,333 666,667 — — — — — — —

RSUs 2/27/2018 2/5/2018 — — — — — — — 21,341 — — 333,346

During fiscal year 2018, the Named Executive Officers received the following types of plan-based awards: Short-Term Incentive (Annual) (“STI”); KBR Long-Term(1)Performance Cash Awards (“PAs”), which are based 50% on total stockholder return (“TSR”) and 50% on job income sold (“JIS”); and KBR Restricted Stock Units(“RSUs”). All awards were granted under the KBR 2006 Stock and Incentive Plan, except that the STI was granted under the KBR Senior Executive Performance Pay Plan(the “Performance Pay Plan”), which is a performance program under the KBR 2006 Stock and Incentive Plan.

The PAs in the Equity Incentive Plan Awards columns have a target value of $1.00 per unit (not the value of the Company’s common stock), and the PA amounts above(2)represent the total dollar value of the incentive opportunity. Actual STI and PA payments may equal amounts between performance level percentages based on theachievement levels of performance metrics. 2018 STI payments are calculated using the Participant’s annual base salary as determined on January 1, 2018 (or the first daythe Participant becomes eligible to participate in the Performance Pay Plan if such day occurs after the first day of January). Estimated payments of the portions of thePAs based 50% on TSR and 50% on JIS are each calculated using half of the Participant’s total KBR Long-Term Performance Cash Award granted in 2018.

The restricted stock units in column (l) vest equally over three years.(3)

The amounts in column (o) are calculated for RSUs based on the product of the number of RSUs granted and the closing price of the Company’s common stock on the(4)Grant Date and are calculated for PAs based on each PA unit having a grant date fair value of $0.519. These amounts reflect the aggregate grant date fair value computedin accordance with FASB ASC 718.




Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

No Employment Agreements Our Named Executive Officers do not have employment agreements. Each of our Named Executive Officers entered into severanceand change-in-control agreements that only provide for severance-type benefits (including severance following a change in control)(see the section titled “Severance and Change-in-Control Agreements” for more detail).

Long-Term Incentives During fiscal year 2018, our Named Executive Officers receivedthe following types of plan-based awards under the KBR Stockand Incentive Plan (under which the Performance Pay Plan wasadopted): (1) an annual short-term incentive (“STI”) award, whichis based on achieving pre-established metrics and is paid in cash(see the section titled “Short-Term Incentives (Annual)” for moredetail), (2) long-term performance cash awards (“PAs”), whichare based 50% on total stockholder return (“TSR”) and 50% onjob income sold (“JIS”) and (3) restricted stock units (“RSUs”).

The PAs were granted on February 27, 2018. Each PA has atarget value of $1.00. The actual payout, if earned, of a PA at theend of the performance period will be determined based 50% onthe level of achievement during the performance period of thecomparison of the average TSR (measured with a 20-trading-dayaverage price) of the Company’s common stock at the end ofthe performance period to the average TSR of each of thecommon stocks of the members of the peer group for theperformance period and 50% on JIS. Specifically, each peergroup company’s TSR is measured every quarter, indexed backto the start of the year, and KBR’s similarly calculated averagequarterly indexed TSR is ranked relative to its peers. The averagequarterly indexed Company’s TSR rank is measured over thethree-year performance period, which runs fromJanuary 1, 2018, to December 31, 2020.

The remaining 50% of the PAs will be determined based on JISover the same three-year performance period. JIS is theCompany’s and its consolidated subsidiaries job income from (i)new projects awarded and (ii) earnings changes from contractamendments (increases or decreases), or scope adjustments(increases or decreases) to existing projects. JIS is calculated asthe average of the achievement levels of the JIS performancemetric for each year during the three-year performance period.Like the TSR portion of the 2018 PAs, achievement of Thresholdpays out at 25%, Target at 100%, and Maximum at 200%, allweighted 50%. No award will be paid for JIS under the PAs untilafter the end of the three-year performance period when theaverage JIS earned will be calculated using the average JISpercentage achieved during each year in the three-yearperformance period.

In addition to the TSR and JIS performance measures, 20% ofthe PAs granted on February 27, 2018, were subject to forfeitureif the Compensation Committee in its sole discretion determinedthat 2018 was not a successful year for us. The metric was aone-time metric that if not satisfied at the end of 2018 wouldresult in the forfeiture of 20% of the PAs granted in 2018. In2018, this performance metric was satisfied.

The 50% TSR portion of the 2016, 2017 and 2018 grants of KBRLong-Term Performance Cash Awards are reported in the “StockAwards” column of the Summary Compensation Table for 2016,2017, and 2018, the years in which the awards were granted(rather than in the “Non-Equity Incentive Plan Compensation”column in the year they were earned (2018, 2019, and 2020)),because the TSR portion of KBR Long-Term Performance CashAwards fell within the scope of FASB ASC 718.

The payout for the 50% JIS portion of the 2016, 2017 and 2018KBR Long-Term Performance Cash Awards will be reported inthe “Non-Equity Incentive Plan Compensation” column of theSummary Compensation Table in the year earned because theJIS portion does not fall within the scope of FASB ASC 718. Dueto the JIS performance requirement being met in 2018 for the2016 KBR Long-Term Performance Cash Awards, the“Non-Equity Incentive Plan Compensation” column of theSummary Compensation Table includes the JIS portion of the2016 KBR Long-Term Performance Cash Awards in 2018 whilezero payout was included in the “Non-Equity Incentive PlanCompensation” column of the Summary Compensation Table in2016 for the 2014 KBR Long-Term Performance Cash Awardsdue to downward discretion of our Compensation Committee.

In February 2018, our Compensation Committee approvedlong-term incentive target values of $6,000,000 for Mr. Bradie,$850,000 for Mr. Ibrahim, $1,000,000 for Mr. Mackey,$1,400,000 for Mr. Mujib and $1,000,000 for Mr. Sopp. TheCompensation Committee established these long-term incentivetarget values as described in the “Compensation Discussion andAnalysis” section of this proxy statement under the section titled“KBR Stock and Incentive Plan.” Long-term incentive awardswere delivered through a combination of cash-based PAs andequity-based RSUs.

The Compensation Committee determined the number of PAsfor each Named Executive Officer by multiplying the totallong-term incentive target value by 66 ⅔% and dividing theproduct by $1.00 (the target value of each PA). OurCompensation Committee decided to use $1.00 as the targetvalue for each PA for the purpose of administering andcommunicating the award. In addition, the use of $1.00 as atarget value for each PA is a means of expressing the value ofeach award since the number of PAs were granted based on thetotal target value of long-term incentive awards. The actual valueof a PA may increase to a maximum of 200% of $1.00, or $2.00,or decrease to below threshold to 0% of $1.00, or $0.00. Thevalue of PAs for performance between threshold and target ortarget and maximum will be calculated using linear interpolation.




A three-year performance award cycle was adopted because ofthe ability to provide for retention and to align the long-terminterest of the Named Executive Officers with our stockholders.

The RSUs granted on February 27, 2018, under the KBR 2006Stock and Incentive Plan vest in increments of 33 ⅓% annuallyover three years. The Compensation Committee determined thenumber of RSUs for each Named Executive Officer bymultiplying the total long-term incentive target value by 33 ⅓%and dividing the product by the closing price of our commonstock on the date of grant.

In addition to the service requirement for vesting, 20% of therestricted stock units that were granted on February 27, 2018,were subject to forfeiture if our Compensation Committee in itssole discretion determined that 2018 was not a successful yearfor KBR. The metric was a one-time metric that if not satisfied atthe end of 2018 would result in the forfeiture of the performancestock units granted in 2018. In 2018, this performance metricwas satisfied.

Short-Term Incentives (Annual) Our Named Executive Officers were eligible to participate in theKBR Senior Executive Performance Pay Plan (the “PerformancePay Plan”) for the 2018 calendar year. Payouts under thePerformance Pay Plan are based on our Named Executive Officer’sindividual performance and on the levels of achievement of thePerformance Pay Plan’s performance metrics.

The pre-established performance metrics for the 2018 calendaryear are described in the Compensation Discussion and Analysisabove.

During 2018, the short-term incentive award opportunities werebased on a percentage of base salary assuming attainment ofspecified threshold, target, and maximum performance levels,which were, respectively: (i) for Mr. Bradie, 31.25%, 125%, and250% and (ii) for Messrs. Ibrahim, Mackey and Sopp 20%, 80%,and 160% and (iii) for Mr. Mujib 22.5%, 90% and 180%.

Salary and Short-Term Incentive in Proportion to Total CompensationAssuming target performance with respect to the long-term generally received on average approximately 53.04% of their totalincentive awards under our KBR 2006 Stock and Incentive Plan, our compensation in the form of base salary and annual cash-based STICEO, Mr. Bradie, received approximately 33.26% of his total awards. Please see the “Compensation Discussion and Analysis”compensation in the form of base salary and annual cash-based STI section of this proxy statement for a description of the philosophyawards, and our Named Executive Officers (other than our CEO) and objectives of our compensation program.




Outstanding Equity Awards at Fiscal Year EndThe following table provides information on the exercise and holdings of previously awarded equity grants outstanding as ofDecember 31, 2018.

NameGrantDate(1)

Option Awards Stock Awards

Number ofSecurities

UnderlyingUnexercised

Options (#)Exercisable

Number ofSecurities

UnderlyingUnexercised

Options (#)Unexercisable

EquityIncentive

PlanAwards:

# of SecuritiesUnderlying

UnexercisedUnearned

Options(#)

OptionExercise

Price($)

OptionExpiration

Date

Number ofShares or

Units ofStock That

Have NotVested

(#)(2)

MarketValue of

Shares orUnits of

Stock ThatHave Not

Vested($)(3)

EquityIncentive

Plan Awards:# of UnearnedShares, Units

or Other RightsThat Have Not

Vested(#)(4)

Equity IncentivePlan Awards:

Market orPayout Valueof Unearned

Shares, Units orOther

Rights ThatHave Not

Vested($)(5)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Stuart J. B. Bradie 2/27/2018 — — — — — 128,041 1,943,662 2,000,000 500,000

2/28/2017 — — — — — 88,595 1,344,872 2,000,000 500,000

3/01/2016 — — — — — 43,934 666,918 — —

2/25/2015 123,176 — — 18.16 2/25/2025 — — — —

7/2/2014 — — — — — 8,237 125,038 6,177 93,767

TOTAL 123,176 — — — — 268,807 4,080,490 4,006,177 1,093,767

Mark W. Sopp(6) 2/27/2018 — — — — — 21,341 323,956 333,334 83,333

2/28/2017 — — — — — 28,057 425,905 333,334 83,333

TOTAL — — — — — 49,398 749,861 666,668 166,666

Farhan Mujib 2/27/2018 — — — — — 29,877 453,533 466,667 116,667

2/28/2017 — — — — — 20,672 313,801 466,667 116,667

3/01/2016 — — — — — 11,184 169,773 — —

2/25/2015 38,322 — — 18.16 2/25/2025 — — — —

3/05/2014 17,188 — — 27.85 3/05/2024 — — — —

3/06/2013 14,194 — — 30.24 3/06/2023 — — — —

2/01/2013 9,011 — — 31.42 2/01/2023 — — — —

4/04/2012 4,151 — — 35.14 4/04/2022 — — — —

8/22/2011 532 — — 25.99 8/22/2021 — — — —

4/01/2011 1,779 — — 38.33 4/01/2021 — — — —

3/10/2010 2,343 — — 21.19 3/10/2020 — — — —

6/26/2009 678 — — 18.66 6/26/2019 — — — —

3/06/2009 2,496 — — 11.71 3/06/2019 — — — —

TOTAL 90,694 — — — — 61,733 937,107 933,334 233,334

J. Jay Ibrahim 2/27/2018 — — — — — 18,140 275,365 283,334 70,833

2/28/2017 — — — — — 12,552 190,539 283,334 70,833

3/01/2016 — — — — — 5,991 90,943 — —

5/14/2015 22,190 — — 18.30 5/14/2025 — — — —

TOTAL 22,190 — — — — 36,683 556,847 566,668 141,666

Ian J. Mackey 2/27/2018 — — — — — 21,341 323,956 333,334 83,333

2/28/2017 — — — — — 14,767 224,163 333,334 83,333

3/01/2016 — — — — — 7,190 109,144 — —

2/25/2015 24,636 — — 18.16 2/25/2025 — — — —

TOTAL 24,636 — — — — 43,298 657,263 666,668 166,666




The awards granted consist of KBR restricted stock units (“RSUs”), certain RSUs that we granted in 2014 and 2016 that we refer to as(1)performance stock units (“PSUs”), performance cash awards based on total stockholder return (“TSR”), or options under the KBR Stock andIncentive Plan.Generally, our RSUs vest at a rate of 33 ⅓% per year over a three-year vesting period; however, with respect to the 41,169 RSUs and 30,877 PSUs(2)granted to Mr. Bradie on July 2, 2014, the units vest at a rate of 20% per year over a five-year vesting period. With respect to the RSUs granted toMr. Sopp on February 28, 2017, 14,767 unvested units relate to his annual grant and 13,290 unvested units relate to his sign-on grant that hereceived upon commencement of his employment in February 2017. With respect to the RSUs granted on February 28, 2017, andFebruary 27, 2018, the units vest at a rate of 33 ⅓% per year over a three-year vesting period; however, vesting of 20% of the total RSUs grantedis also subject to the Compensation Committee’s determination, in its sole discretion, that 2017 and 2018, respectively, were successful years forus, which the Compensation Committee determined they were.Market value in this table is based upon a fair market value of $15.18 per share for KBR common stock, the closing price on December 31, 2018(3)(the last trading day of the year).The number of unearned shares includes 20% of Mr. Bradie’s 30,877 PSUs that were granted on July 2, 2014, and vest at a rate of 20% per year(4)over a five-year vesting period subject to KBR having TSR of at least 6% in the immediately preceding year. In addition, this column includes 50%of the performance cash awards granted in 2017 and 2018 that are based on TSR. These performance cash awards are payable only in cash andcliff-vest, if earned, at the end of the three-year vesting periods (December 31, 2019, and December 31, 2020, respectively).This column includes the value of performance cash awards based on TSR and PSUs. With respect to the performance cash awards granted in(5)2017 and 2018, this column represents the threshold cash payout of $0.25 for the number of performance cash awards based on TSR. Under theSEC rules, the payout value reported in this column must be disclosed based on achieving threshold performance goals, except that if performanceduring the last completed fiscal year (or, if the payout is based on performance to occur over more than one year, the last completed fiscal yearsover which performance is measured) has exceeded threshold, we must disclose the next higher performance measure (target or maximum) thatexceeds the last completed fiscal year’s performance (or, if the payout is based on performance to occur over more than one year, the lastcompleted fiscal years over which performance is measured). The payout of these performance cash awards is not calculated based on theCompany’s stock price and accordingly was calculated by using the applicable threshold cash payout amount of $0.25 for each performance awardunit. With respect to PSUs granted in previous years, this column represents the target value of such awards, which is the fair market value of$15.18 per share for KBR common stock on December 31, 2018. Under SEC rules, if an award provides only for a single estimated payout, thatamount should be reported.Mr. Sopp was not granted any options due to commencement of his employment in 2017 as the Company did not grant options to employees from(6)2016 onward.

Option Exercises and Stock VestedThe following table shows information for 2018 regarding the exercise of stock options and the vesting of restricted stock andrestricted stock units.

Name

Option Awards Stock Awards

Number of SharesAcquired on Exercise

(#)

Value Realized onExercise

($)

Number of SharesAcquired on Vesting

(#)(1)

Value Realized onVesting

($)(2)

(a) (b) (c) (d) (e)

Stuart J. B. Bradie — — 123,288 1,917,593

Mark W. Sopp — — 14,026 212,354

Farhan Mujib — — 29,088 443,733

J. Jay Ibrahim — — 19,325 305,561

Ian J. Mackey — — 18,702 283,618

Represents the number of restricted stock units (“RSUs”) and performance stock units (“PSUs”) that vested during the fiscal year 2018. The cash(1)performance awards (“PAs”) granted in 2016 vested on December 31, 2018, due to the JIS performance requirement being met for the three-yearperformance period, but no vesting occurred with respect to the TSR portion of such PAs because threshold performance was not achieved for theTSR performance goal. Accordingly, no amount is included under columns (d) and (e) above with respect to the TSR-based portion of such PAs. ForMr. Bradie, 99,467 RSUs and 23,821 PSUs vested. For Mr. Sopp, 12,550 RSUs and 1,476 PSUs vested. For Mr. Mujib, 24,784 RSUs and 4,304PSUs. For Mr. Ibrahim, 16,872 RSUs and 2,453 PSUs vested. For Mr. Mackey, 15,788 RSUs and 2,914 PSUs vested. The JIS-based portion of thePAs that vested in fiscal year 2018 are not included under columns (d) and (e) above but are reported in the “Non-Equity Incentive PlanCompensation” column of the Summary Compensation Table for 2018.Represents the pretax value realized on stock awards that vested during the fiscal year, computed by multiplying the number of shares acquired on(2)vesting by the closing price of common stock on the vesting date.

Pension BenefitsOur Named Executive Officers did not participate in a KBR sponsored pension plan required to be reported under the Pension Benefitstable. Accordingly, the Pension Benefits Table has not been included here.




Nonqualified Deferred Compensation The following table provides information regarding each Named Executive Officer’s contributions to covered deferred compensationplans, earnings accrued during the year, withdrawals and distributions during the year, and plan balances at fiscal year-end.

Name Plan

ExecutiveContributions

inLast FY

($)(1)

RegistrantContributions in

Last FY($)(2)

AggregateEarnings in Last

FY($)(3)

AggregateWithdrawals/Distributions

($)

AggregateBalance at Last

FYE($)(4)

(a) (b) (c) (d) (e) (f)

Stuart J. B. Bradie Elective Deferral — — — — —

Restoration — 42,574 9,605 — 206,114(5)

Mark W. Sopp Elective Deferral — — — — —

Restoration — 20,766 899 — 36,194

Farhan Mujib Elective Deferral — — — —

Restoration — 15,836 1,301 — 38,099

J. Jay Ibrahim Elective Deferral — — — — —

Restoration — 13,388 1,754 — 43,311(5)

Ian J. Mackey Elective Deferral — — — — —

Restoration — 12,323 1,752 — 42,186

The amounts in column (b) are reported as compensation for 2018 in columns (c) and/or (g) of the Summary Compensation Table.(1)The amounts in column (c) are reported as compensation for 2018 in column (i) of the Summary Compensation Table.(2)Only the above-market earnings in column (d) are reported as compensation for 2018 in column (h) of the Summary Compensation Table.(3)Only the amount of the aggregate balance in column (f) that relates to registrant contributions that are reported in column (c) are reported as(4)compensation in the “All Other Compensation” column of the Summary Compensation Table for 2018 as well as amounts previously reported inprior Summary Compensation Tables. The amounts disclosed in the Summary Compensation Table, both as currently and previously reported, foreach NEO are as follows: Mr. Bradie, $128,015; Mr. Sopp, $20,766; Mr. Mujib, $31,120; Mr. Ibrahim, $37,772; and Mr. Mackey, $12,323.Messrs. Bradie and Ibrahim’s aggregate balances under the Benefit Restoration Plan were adjusted upward by $4,865 and $1,304, respectively,(5)after further review to reflect their actual 2017 award amounts received.

Narrative Disclosure to Nonqualified Deferred Compensation Table Under the Elective Deferral Plan, pretax deferrals of up to 75%of base salary and/or incentive compensation are allowed eachyear. Participation, however, is completely voluntary. The otherplans do not allow employee elective deferrals. Earnings for theElective Deferral Plan are based upon the executive’s electionfrom among diversified investment options that include bothstock and bond funds. Investment elections may be changed bythe executive on a monthly basis. Any preferential interestcredited above 120% of the applicable Federal long-term rate isrecorded in the Summary Compensation Table.

of the applicable Federal long-term rate. Accordingly, thepreferential interest credited above 120% of the applicableFederal long-term rate is recorded in the SummaryCompensation Table. In 2018, our Named Executive Officersreceived awards under the plan in the amounts shown in thefootnotes to the Summary Compensation Table.

Earnings for the Restoration Plan are credited based on a bondfund in the KBR Elective Deferral Plan, which was above 120%

Payouts under the Restoration Plan are paid in a lump sum upontermination. Payouts under the Elective Deferral Plan are paid ontermination of employment or a specified future date, either as alump sum or in installments. Withdrawals under the ElectiveDeferral Plan are allowed in the case of an unforeseeableemergency.

Elements of Post-Termination Compensation and Benefits In 2013 with respect to Mr. Mujib, in 2014 with respect toMr. Bradie, in 2015 with respect to Messrs. Ibrahim and Mackeyand in 2017 with respect to Mr. Sopp, our Company entered intoseverance and change-in-control agreements with our NamedExecutive Officers.

severance, accelerated vesting of restricted stock and stockoptions, maximum payments under cash-based short andlong-term incentive plans, nonqualified account balances, andhealth benefits among others.

Termination events that trigger payments and benefits includechange-in-control, normal or early retirement, terminationwithout cause or for good reason, voluntary termination,disability, and death. Post-termination payments may include

See the section below titled “2018 Potential Payments UponTermination or Change-in-Control” for more detail on estimatedpotential payments and benefits under Messrs. Bradie, Ibrahim,Mackey, Mujib and Sopp’s severance and change-in-controlagreements.




Further, see the section titled “Severance and Change-in-Control determined under the various circumstances that triggerAgreements” after the “2018 Potential Payments Upon payments and benefits, (c) any material conditions or obligationsTermination or Change-in-Control” table for a description of: applicable to the receipt of payments or benefits, and (d) any(a) the specific circumstances that would trigger payments and other material factors regarding the severance andbenefits, (b) the appropriate payment and benefit levels as change-in-control agreements.

2018 Potential Payments Upon Termination or Change-In-Control

Executive Benefits(1)(2)

Change inControl without

Termination12/31/2018

($)

Change inControl withInvoluntary

Termination12/31/2018

($)

Retirement,Disability, or

Death on12/31/2018(6)

($)

Involuntary Not ForCause or Voluntary

for Good ReasonTermination on

12/31/2018($)

Voluntarywithout Good

Reason on12/31/2018

($)

(a) (b) (c) (d) (e) (f) (g)

Stuart J. B. Bradie Stock Awards — 4,174,257 4,174,257 — —

Stock Options(3) — — — — —

Performance Awards(4) — 11,666,667 7,289,000 — —

Cash Severance(5) — 9,337,496 2,142,656 4,725,000 —

TOTAL — 25,178,420 13,605,913 4,725,000 —

Mark W. Sopp Stock Awards — 749,862 749,862 — —


Performance Awards(4) — 1,334,334 667,000 — —

Cash Severance(5) — 3,117,809 707,113 652,800 —

TOTAL — 5,202,005 2,123,975 652,800 —

Farhan Mujib Stock Awards — 937,107 937,107 — —



Cash Severance(5) — 2,820,616 605,880 1,065,900 —

TOTAL — 6,557,722 3,313,520 1,065,900 —

J. Jay Ibrahim Stock Awards — 556,847 556,847 — —



Cash Severance(5) — 2,503,232 578,443 934,983 —

TOTAL — 4,126,746 2,150,457 934,983 —

Ian J. Mackey Stock Awards — 657,264 657,264 — —



Cash Severance(5) — 2,476,852 620,000 900,000 —

TOTAL — 4,468,450 2,482,131 900,000 —

The aggregate nonqualified deferred compensation payable to all Named Executive Officers upon termination is set forth in column (f) of the(1)Nonqualified Deferred Compensation Table and is not reflected in this Table.The Table includes amounts payable to the Named Executive Officers if they remained employed through December 31, 2018, pursuant to the KBR(2)Senior Executive Performance Pay Plan (STI), as reported in column (g) of the Summary Compensation Table. If a Named Executive Officer isterminated for “cause” (as defined under the applicable plan/program), all such executive’s rights to payment would be automatically forfeited.Also, the Table does not include those benefits that are generally available to all employees.This table does not include the exercisable stock options reflected in column (b) of the Outstanding Equity Awards at Fiscal Year End table because(3)such options were fully vested on December 31, 2018. No amounts are shown in this table for stock options as there were no unvested stockoptions as of December 31, 2018. Assumes for purposes of change-in-control with termination, retirement, death, and disability that payout for the Performance Awards will be at(4)Target. Performance Awards are fully vested on a change-in-control termination but are prorated on retirement, death, and disability. While thevalue of the 2016 Performance Awards are included in the Change in Control with Involuntary Termination column based on target as requiredpursuant to applicable reporting rules, those awards actually paid out at 89.7% of target.Cash severance includes welfare costs in the case of a change in control with involuntary termination. Cash severance does not include amounts(5)that may be paid to the Named Executive Officers under the severance plan generally available to all employees of the Company. With respect toMr. Sopp's cash severance amount in column (f), the value reflects his graded severance benefit for a termination of employment on or prior to thesecond anniversary of his commencement of employment in February 2017 but after the first anniversary of his commencement of employment.Retirement is discretionary and subject to the approval of the CEO, or in the case of our Senior Executive Management, it is subject to the approval(6)of our Compensation Committee.




Severance and Change-in-Control Agreements Our Compensation Committee approved severance and change-in-control agreements (collectively, the “Agreement”) forMessrs. Bradie, Ibrahim, Mackey, Mujib and Sopp, along with certain other senior executive officers of the Company.

Circumstances That would Trigger Payments and Benefits The Agreement will terminate automatically on the earlier of(i) the executive’s termination of employment with the Companyor (ii) in the event of a change-in-control during the term of theAgreement, two years following the change-in-control. TheAgreement provides for (i) severance termination benefits (priorto a change-in-control), (ii) double-trigger change-in-controltermination benefits (on or after a change-in-control), and(iii) death, disability, and retirement benefits.

Under the Agreement, “cause,” “good reason,” and“change-in-control” are defined as follows:

“Cause” means any of the following: (i) the executive’s grossnegligence or willful misconduct in the performance of theduties and services required of him by the Company; (ii) theexecutive’s conviction of, or plea other than not guilty to, afelony or a misdemeanor involving moral turpitude; or (iii) amaterial violation of the Company’s Code of Business Conduct.However, prior to a change-in-control, “cause” also means theexecutive’s failure to perform, in a reasonably satisfactorymanner, the duties and services required of him by theCompany, provided that the Company gives the executive atleast 10 days’ written notice to cure the failure.

“Good Reason” means any of the following: (i) a materialdiminution in the executive’s base salary, (ii) a material diminutionin the executive’s authority, duties, or responsibilities, including,with respect to Mr. Bradie, the failure to maintain him in theposition of CEO of the Company or nominate him to stand forre-election to the Board of Directors, or (iii) unless agreed to by theexecutive, the relocation of the offices at which the executive isprincipally employed to a location more than 50 miles away.However, prior to a change-in-control, “good reason” means a25% or more diminution in the executive’s base salary, unless asimilar reduction is made to the base salaries of all seniorexecutive officers of the Company, and with respect to Mr. Bradie,it also means (ii) and (iii) of the definition of “good reason” above.

“Change-in-Control” is generally triggered upon any of thefollowing: (i) a person acquires 20% or more of the voting powerof the Company, (ii) the majority of our Board of Directorschanges, (iii) a merger or consolidation of the Company (unless itstill controls a majority of the voting stock), (iv) a completeliquidation or dissolution of the Company, or (v) a sale,disposition, lease, or exchange of all or substantially all theCompany’s assets.

termination and (y) paid to the executive in a lump sum on thenormal payment date for such annual bonuses under the plan, butnot later than the March 15th following the end of the performanceperiod, (b) the executive’s unpaid bonus (if any) accrued under theCompany’s annual cash incentive plan for the fiscal year thatended on or immediately before the executive’s date oftermination, which accrued bonus shall be paid to the executive ina lump sum on the normal payment date for such bonuses underthe plan, but not later than the March 15th following the end ofsuch prior performance period, (c) the restrictions on all restrictedstock and restricted stock units of the executive shall lapse in fullon his date of termination, (d) all stock options and stockappreciation rights (“SARs”) of the executive shall become fullyvested and exercisable on his date of termination and may beexercised until the earlier of (i) the second anniversary of his dateof termination, unless otherwise provided by the CompensationCommittee, in its discretion, or (ii) the remaining term of suchoption or SAR, (e) all outstanding performance awards of theexecutive shall be prorated to his date of termination and to theextent such awards become “earned” based on actualperformance results at the end of the performance period, shallbe paid to the executive in a lump sum on the normal paymentdate for such awards under the plan, but not later than theMarch 15th following the end of the performance period, and (f) allaccount balances of the executive in all supplemental and/ornon-qualified retirement plans of the Company and its affiliatesshall become fully vested on his date of termination.

If, prior to, on, or after a change-in-control, the Named ExecutiveOfficer dies or becomes disabled, then the Company will providehim with the following benefits: (a) the executive’s unearnedbonus under the Company’s annual cash incentive plan payablefor the fiscal year in which the executive’s date of terminationoccurs, with such bonus amount determined at the end of theperformance period in accordance with the plan, and then suchearned amount (if any) (x) prorated to the executive’s date of

If, prior to, on, or after a change-in-control, the Named ExecutiveOfficer retires, then the Company will provide him with theabove death and disability benefits, except that the executivemay only exercise his stock options and SARs until the earlier of(a) the first anniversary of his date of termination, unlessotherwise provided by the Compensation Committee, in itsdiscretion, or (b) the remaining term of such option or SARs.

If, prior to, on, or after a change-in-control, the Named ExecutiveOfficer voluntarily terminates his employment for any reason otherthan a “good reason” or retirement, the executive will not beentitled to any payments or benefits and his vested stock optionsand SARs must be exercised within 30 days of the date of histermination, but not later than the option or SAR expiration date.

If, prior to, on, or after a change-in-control, the Named ExecutiveOfficer’s employment is terminated by the Company for“cause,” the executive will not be entitled to any severancepayments or benefits.

If, prior to a change-in-control, the Named Executive Officer’semployment is terminated by us (except for “cause”), or if theNamed Executive Officer terminates his employment for “goodreason,” the Company will provide the executive with thefollowing benefits: (a) a lump-sum cash payment equal to thesum of: (i) one (two with respect to Mr. Bradie) year’s base




salary in effect at termination plus (ii) (two times with respect toMr. Bradie) the executive’s annual target bonus opportunity,(b) all vested stock options and SARs may be exercised withinthe one-year period following his date of termination, but notlater than the remaining term of the option or SARs, and (c) allunvested stock options, SARs, restricted stock, restricted stockunits, and performance awards shall be forfeited, unless and tothe extent provided otherwise by the Compensation Committee,in its discretion, with respect to non-performance awards.Notwithstanding the above, with respect to Messrs. Mackey andSopp, who have Agreements that provide graded severancetermination benefits based on service time with the Company,the Company will provide the same benefits as described aboveexcept that the lump-sum cash payment will be graded asfollows: (i) one half of one year's base salary in effect attermination if the termination date occurs on or prior to the firstanniversary of the executive’s employment commencementdate with the Company; (ii) one year's base salary in effect attermination if the termination date occurs on or prior to thesecond anniversary of the executive’s employmentcommencement date with the Company but after the firstanniversary of executive’s employment commencement datewith the Company; or (iii) one year’s base salary in effect attermination plus the executive’s annual target bonus opportunityif the termination date occurs after the second anniversary of theexecutive’s employment commencement date with theCompany.

(three times with respect to Mr. Bradie) the executive’s annualtarget bonus opportunity, (b) the executive’s unearned bonusunder the Company’s annual cash incentive plan payable for thefiscal year in which the executive’s date of termination occurs,with such bonus amount determined at the end of theperformance period in accordance with the plan, and then suchearned amount (if any) (x) prorated to the executive’s date oftermination and (y) paid to the executive in a lump sum on thenormal payment date for such annual bonuses under the plan, butnot later than the March 15th following the end of the performanceperiod, (c) the executive’s unpaid bonus (if any) accrued under theCompany’s annual cash incentive plan for the fiscal year thatended on or immediately before the executive’s date oftermination, which accrued bonus shall be paid to the executive ina lump sum on the normal payment date for such bonuses underthe plan, but not later than 74 days following the executive’stermination of employment with the Company, (d) all theoutstanding stock options, SARs, restricted stock and restrictedstock unit awards, and other equity based awards granted by theCompany to the executive that are not performance awards shallbecome fully vested and immediately exercisable or payable in fullon the effective date of the release required under theAgreement, provided such release is timely executed by theexecutive following his termination of employment with theCompany, (e) all performance award units other than those thatare covered under the Company’s annual cash incentive plan, shallbecome fully vested and paid at target performance as soon asadministratively feasible following his termination of employmentIf both (1) a change-in-control occurs and (2) on, or within twowith the Company, but not later than March 15th following theyears after the change-in-control, the Company involuntarilyyear in which he terminated employment with the Company, (f) allterminates the Named Executive Officer’s employment withoutaccount balances in any supplemental and/or nonqualifiedcause or the Named Executive Officer terminates his employmentretirement plans shall become fully vested, and (g) welfare planfor “good reason” then, the Company will provide them with thecosts equal to two times (three times with respect to Mr. Bradie)following change-in-control termination benefits: (a) a lump sumthe total annual cost to the executive and the Company of thecash payment equal to the sum of: (i) two times (three times withmedical, dental, life, and disability benefits provided to therespect to Mr. Bradie) the executive’s base salary in effect atexecutive and the executive’s eligible dependents by thetermination (or, if higher, the executive’s base salary in effectCompany for the year of the executive’s termination.immediately prior to the change-in-control) plus (ii) two times

Determination of Appropriate Payment and Benefit Levels Under the Various Circumstances that Trigger Payments and Benefits Our Compensation Committee engaged AonHewitt, its previous Committee asked its Chairman to work with AonHewitt,compensation consultant, to assist in the development of the in-house legal counsel, and outside legal counsel to prepare theAgreement. In February 2008, AonHewitt presented a Agreement consistent with these suggestions. In May 2008,comprehensive overview of market practices of severance and AonHewitt presented the revised program, with all the potentialchange-in-control benefits among our then Core Peer Group, as costs associated with the suggested Agreement. After furtherwell as, AonHewitt’s knowledge of general market practices and review, and advice from outside legal counsel that theemerging trends. In addition, AonHewitt provided the Agreement was more favorable to KBR than our peer companiesCompensation Committee with a proposed severance and with respect to severance (without a change-in-control) paymentchange-in-control program that was consistent with the median triggers and that it was consistent with our peer companies withof such Core Peer Group. Our Compensation Committee elected respect to severance following a change-in-control, ourto move forward with the proposed program, except that the Compensation Committee approved the Agreement inCompensation Committee wanted to make severance payments May 2008. Since May 2008, our Compensation Committee has(without a change-in-control) more difficult to trigger as regularly reviewed the Agreement to ensure it remainscompared to the terms of the companies in such Core Peer consistent with the median of our most current Core PeerGroup. Further, our Compensation Committee elected to add a Group, which is reviewed annually.broad two-year clawback provision. Our Compensation




Material Conditions or Obligations Applicable to the Receipt of Payments or Benefits As a condition to receive the severance benefits upon a the Company determines within two years after the executive’stermination by the Company (except for “cause”) or a termination of employment that his employment could haveresignation by the executive for “good reason” or retirement, been terminated for cause. The Agreement provides that allthe executives must first execute a release and full settlement unvested stock options, SARs, restricted stock, restricted stockagreement. The Agreement also contains customary units, and performance awards granted to the executives by theconfidentiality, non-competition, and non-solicitation covenants, Company will be forfeited upon severance (without aas well as a mandatory arbitration provision. In addition, the change-in-control). Such awards, however, will fully vest upon aAgreement contains a clawback provision that allows the double-trigger change-in-control termination.Company to recover any benefits paid under the Agreement if

No Employment AgreementsThe Company has no employment agreements with its Named Executive Officers. Each of our Named Executive Officers has enteredinto severance and change-in-control agreements that only provide for severance-type benefits, as described in the above section.

CEO Pay RatioIn 2015, the Securities and Exchange Commission adopted a rule to implement the pay ratio disclosure requirement mandated by Section953(b) of the Dodd-Frank Act. In doing so, the Commission stated its belief that, in order for data points provided by the rule to be of useto investors, the pay ratio rule “should be designed to allow stockholders’ to better understand and assess a particular registrant’scompensation practices and pay ratio disclosures rather than to facilitate a comparison of this information from one registrant to another.”

Key Provisions of the rule are: Companies must provide pay ratio disclosures for their first●fiscal year that starts on or after January 1, 2017.

Under the rule, companies must disclose: 1) the median of the●annual total compensation of all employees (other than theCEO); 2) the annual total compensation of the CEO; and 3) theratio between those two numbers.

The SEC did not exclude part-time, seasonal, or temporary●employees from the pay ratio calculation. Independentcontractors and leased workers may be excluded.

Companies are required to include non-U.S. employees in their●calculation, but they may exclude employees who reside inforeign jurisdictions where it would not be feasible to obtainsalary information without violating local data privacy laws. Inaddition, there is a de minimis provision that allows companiesto omit up to 5% of their foreign employees based on dataprivacy or any other reason.

In determining the median employee, companies may select●any date within the last three months of their fiscal year.

Companies are permitted to identify the median employee●once every three years, unless there is a change in itsemployee population or compensation arrangements thatwould result in a significant change in its ratio.

Companies may use statistical sampling in identifying the●median employee, but they must disclose their methodologyused in calculating that number.

Pay Ratio Methodology and Calculation

Determination of Employee Population

The median employee that we used for purposes of calculating theCEO pay ratio in the 2018 Proxy Statement has been updated forpurposes of our 2018 disclosure in this Proxy Statement to includeemployees from SGT and Aspire Defence that were added to ouremployee population following the acquisitions. We determined that,as of December 31, 2018 (which is the date we chose to identify ourmedian employee), our employee population consisted ofapproximately 24,785 individuals working for the company and itsconsolidated subsidiaries, with approximately 12,763 of theseindividuals located in the United States and approximately 12,022located in other countries. This population consisted of our full-time,part-time, external and temporary employees, as we do not haveseasonal workers, and excludes approximately 11,000 employeesworking in joint ventures that are not consolidated subsidiaries ofKBR and who are not otherwise our employees. We excluded 5% ofour total employees in the following non-US jurisdictions:approximately 595 employees from Poland and 548 employees fromRussia. We also excluded approximately 135 external employeeswhose take home pay is not controlled by KBR. As a result, the totalnumber of employees used to identify the median of the annual totalcompensation of all our employees was approximately 23,507, ofwhich approximately 12,628 were located in the United States andapproximately 10,879 were located in other countries.

Consistently Applied Compensation Measure

We used total cash compensation for 2018 (without making anycost-of-living adjustment) as a consistently applied compensationmeasure to identify our median employee. Short- and long-term




equity-based incentives were excluded from our compensationmeasure since such incentives are not broad-based and includingthem would not substantially impact the determination of ourmedian employee. Total cash compensation is a relatively broadmeasure of pay and may not include equity-based compensation.The Company chose not to use earnings reported to the InternalRevenue Service on Form W-2 for employees in the United Statesbecause it would include equity-based compensation and is not ameasure that can be easily applied consistently to employeesoutside of the United States. Compensation of employees whowere on unpaid leave of absence was annualized.

Data Gathering

included in the calculation are based in approximately50 different countries.

While the rule allows for statistical sampling and/or “otherreasonable methods”, data collection was performed for allemployees as it would have been costly to analyze how tocreate a subgroup that was representative for the entireemployee population given that the non-U.S. employees

Pay Ratio Calculation

After we identified our median employee, we combined all theelements of such employee’s compensation for the 2018 year inaccordance with the requirements of Item 402(c)(2)(x) ofRegulation S-K, resulting in annual total compensation of$61,592. With respect to the annual total compensation of ourCEO, we used $9,595,456, which is the amount reported in the“Total” column of our 2018 Summary Compensation Tableincluded in this Proxy Statement and incorporated by referenceunder Item 11 of Part III of our Annual Report.

Based on this information, for 2018 the ratio of the annual totalcompensation of our CEO to the median of the annual totalcompensation of all employees was reasonably estimated tobe 156:1.



Director Compensation

Director CompensationIn 2018, all non-executive Directors received an annual retainerof $100,000. An additional annual retainer of $125,000 was paidto Mr. Carroll for his role as non-executive Chairman of theBoard. The Chairman of each committee also received anadditional annual retainer as follows: Audit—$20,000;Compensation—$15,000; Health, Safety, Security, Environmentand Social Responsibility—$10,000; and Nominating andCorporate Governance—$10,000. As recommended by ourCompensation Committee, in 2018 each of our non-executiveDirectors received an annual award of $150,000 worth ofrestricted stock units (“RSUs”) under the KBR Stock andIncentive Plan. The vesting period is six-month cliff vesting. OurBoard of Directors established share ownership guidelines forthe non-executive Directors in an effort to link more closely thefinancial interests of the non-executive Directors with those ofKBR’s stockholders. Non-executive Directors are required toown KBR stock in an amount equal to five times thenon-executive Director annual cash retainer within five years ofjoining the Board of Directors.

their cash compensation converted to RSUs. For the 2018 planyear, General Lyles elected to defer 50% of his cashcompensation and 100% of his equity compensation into theplan.

In December 2013, based on the recommendation of ourNominating and Corporate Governance Committee, our Board ofDirectors adopted a nonqualified elective deferral plan fornon-executive Directors. The plan, which became effectiveJanuary 1, 2014, permits non-executive Directors to make anannual election to defer payment of some or all of their cashretainers and equity compensation for the following year. Thenon-executive Directors also have the option to elect to have

Our Compensation Committee reviews the competitiveness ofthe compensation of our non-executive Directors at leastannually. The results of the most recent review were presentedto our Board in May 2018, and based on these results, onechange was made to the compensation of our non-executiveDirectors. In August 2018, our Board approved increasing thevalue of the annual award of RSUs from $110,000 to $150,000beginning in the 2018 calendar year and for each subsequentcalendar year to bring the Company’s average non-executivedirector compensation closer to the median of its peers. Sincethe Board had already granted an award of $110,000 worth ofRSUs to each of our non-executive Directors in February 2018,the Board granted an additional award of $40,000 worth of RSUsto each of our non-executive Directors in August 2018. Prior tothe increase in value of the annual award of RSUs, the lastchange approved by our Board was to increase the additionalannual retainer for the Chairman of the Audit Committee from$15,000 to $20,000 beginning in the fourth quarter of 2016.There have been no increases to the additional annual retainersfor the chairmen of the other committees since 2012. Inaddition, there has been no increase to the annual retainer since2010, and prior to the increase in August 2018, the last increaseto the annual award of RSUs was in 2012.

The following table sets forth certain information with respect to KBR’s director compensation for non-executive Directors during thefiscal year ended December 31, 2018.

Name(1)

Fees Earned orPaid in Cash

($)(2)

StockAwards

($)(3)

Change in Pension Valueand Nonqualified

Deferred CompensationEarnings

($)(4)

All OtherCompensation

($)(5)Total

($)

(a) (b) (c) (d) (e) (f)

Mark E. Baldwin 120,000 150,023 — 6,648 276,671

James R. Blackwell 100,000 150,023 — 4,335 254,358

Loren K. Carroll 225,000 150,023 — 920 375,943

Jeffrey E. Curtiss 55,000 110,012 — — 165,012

Lester L. Lyles(6) 110,000 150,023 6,755 — 266,778

Wendy M. Masiello 100,000 150,023 — — 250,023

Jack B. Moore 115,000 150,023 — 2,778 267,801

Ann D. Pickard 107,500 150,023 — — 257,523

Umberto della Sala 100,000 150,023 — 8,737 258,760

Directors who were also full-time officers or employees of KBR received no additional compensation for serving as directors.(1)Director fees reflect fees earned in 2018, including fees that may have been deferred into the KBR Non-Employee Directors Elective Deferral Plan.(2)Mr. Curtiss retired from the Board in May 2018 and therefore did not earn his cash retainer for the full year of 2018 nor did he receive the additionalannual award of RSUs that was granted to all Directors in August 2018.



Director Compensation

The amounts in column (c) represent the grant date fair value of awards granted in 2018 pursuant to the KBR 2006 Stock and Incentive Plan. The(3)fair values were determined in accordance with FASB ASC 718, “Stock Compensation.” Assumptions used in the calculation of these amounts aredescribed in note 1 under “Description of Company and Significant Accounting Policies” and note 21 under “Share-based Compensation andIncentive Plans” of our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2018. Dividendspaid on the stock awards are not reported separately in this table because they are already factored into the grant date fair value. With respect tothe awards granted in 2018, this column represents the vested and unvested award amounts. The unvested awards disclosed in this column, foreach Director, except for Mr. Curtiss, due to his retirement from the Board in May 2018, pertain to an additional annual RSU grant of 1,971 RSUs,worth $40,011, that was granted in August 2018, and that award will vest in full six months after the grant date.The amount in column (d) reflects the above-market or preferential earnings on nonqualified deferred compensation in General Lyles's cash retainer(4)account under the KBR Non-Employee Directors Elective Deferral Plan. The amounts in column (e) reflect travel expenses for spouses to accompany the Directors to one board meeting in 2018 and the reimbursement of(5)the taxes associated with the payments of these expenses. The tax reimbursements for the spousal travel expenses equal $2,659 for Mr. Baldwin,$1,734 for Mr. Blackwell, $368 for Mr. Carroll, $1,111 for Mr. Moore, and $3,495 for Mr. della Sala.General Lyles elected to defer 50% of his annual cash retainer payable for 2018 into the KBR Non-Employee Directors Elective Deferral Plan.(6)Accordingly, he actually received only half of the amount in column (b) in cash in 2018.



Section 16(a) Beneficial Ownership Reporting Compliance

Certain Relationships and Related TransactionsWe perform many of our projects through incorporated and situations where we account for our interest in the joint ventureunincorporated joint ventures. In addition to participating as a under the equity method of accounting, we do not eliminate anyjoint venture partner, we often provide engineering, portion of our revenues or expenses. We recognize the profit onprocurement, construction, operations or maintenance services our services provided to joint ventures that we consolidate andto the joint venture as a subcontractor. Where we provide joint ventures that we record under the equity method ofservices to a joint venture that we control and therefore accounting primarily using the percentage-of-completionconsolidate for financial reporting purposes, we eliminate method.intercompany revenues and expenses on such transactions. In

Related Person PoliciesOur Board of Directors has adopted a policy requiring its approval or the best interests of our stockholders. In determining whetherof any transactions involving our directors, executive officers or to approve or ratify a related person transaction, the Board ofany nominees for director and any greater than 5% stockholders Directors will apply the following standards and such otherand their immediate family members. The types of transactions standards it deems appropriate:covered by this policy are transactions, arrangements orrelationships or any series of similar transactions, arrangementsor relationships (including any indebtedness or guarantee ofindebtedness) in which (1) we (including any of our subsidiaries)were, or will be a participant, (2) the aggregate amount involvedexceeds $120,000 in any calendar year, and (3) any relatedperson had, has or will have a direct or indirect interest (otherthan solely as a result of being a director or holding less than a10 percent beneficial ownership interest in another entity), andwhich is required by the rules and regulations of the SEC to bedisclosed in our public filings. The Board of Directors will onlyapprove transactions with related persons when the Board ofDirectors determines such transactions are in our best interests

whether the related person transaction is on terms no less●favorable than terms generally available to an unaffiliatedthird-party under the same or similar circumstances;

whether the transaction is material to us or the related person;●the role the related person has played in arranging the related●person transaction;

the structure of the related person transaction;●the extent of the related person’s interest in the●transaction; and

whether there are alternative sources for the subject matter of●the transaction.

Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”), requires KBR’s directors andexecutive officers, and persons who own more than ten percentof a registered class of KBR’s equity securities, to file with theSEC and the NYSE initial reports of ownership and reports ofchanges in ownership of common stock of KBR.

To our knowledge, based solely on review of the copies of suchreports furnished to us and written representations that suchreports accurately reflect all reportable transactions and holdings,with respect to the fiscal year ended December 31, 2018, andduring 2019 through the date of this proxy statement, allofficers, directors and greater than ten-percent beneficial ownerscomplied with all applicable Section 16(a) filing requirements.



Proposal No. 2 - Advisory Vote to Approve Named Executive Officer Compensation

Advisory Vote to Proposal No. 2 -Approve Named Executive Officer Compensation

The Board of Directors recommends that you vote FOR the advisory vote to approve our NEOs’ compensation as disclosed in this proxy statement. Properly dated and signed proxies, and proxies properly submitted over the Internet and by telephone, will be so voted unless stockholders specify otherwise.

As required by Section 14A(a)(1) of the Exchange Act, the Boardof Directors is providing our stockholders with the opportunity tocast a non-binding advisory vote to approve the compensation ofour Named Executive Officers (“NEOs”) as disclosed in thisproxy statement.

officer compensation, that choice having been selected by theholders of a majority of the shares of common stock present inperson or by proxy at the meeting and entitled to vote. TheCompensation Committee considered the results to be anaffirmation of the stockholders’ support of our compensationpolicies and decisions. The second advisory vote on thefrequency of advisory votes to approve named executive officercompensation was held at KBR’s 2017 Annual Meeting ofStockholders. Under KBR’s Bylaws, the advisory vote on thefrequency of the advisory vote to approve named executiveofficer compensation was in favor of one year, with that periodhaving been selected by the holders of a majority of the sharesof common stock present in person or by proxy at the meetingand entitled to vote. In light of these voting results, KBR’s Board

The eighth stockholder advisory vote to approve named of Directors determined that KBR will hold an advisory vote toexecutive officer compensation since the initial public offering of approve named executive officer compensation each year untilKBR’s common stock was held last year at KBR’s 2018 Annual the results of the next advisory vote on the frequency ofMeeting of Stockholders. Under KBR’s Bylaws, the 2018 advisory votes to approve named executive officeradvisory vote was in favor of approval of our named executive compensation are reviewed at the 2023 annual meeting.

Executive CompensationThe Compensation Committee establishes, recommends andgoverns all the compensation and benefits policies and actionsfor KBR’s NEOs, as defined above under “CompensationDiscussion and Analysis — Executive Summary.” Consistentwith our compensation philosophy, our executive compensationprogram has been designed to achieve the following primaryobjectives:

provide a clear and direct relationship between executive pay●and Company (and Business, as applicable) performance, bothon a short and long-term basis;

emphasize operating performance measures;●link executive pay to measures of stockholder value;●support our business strategies and management processes●in order to motivate our executives; and

generally target base salary, short-term incentives, long-term●incentives, and total compensation levels near the 50th

percentile of the competitive market for good performance,and above the 50th percentile of the competitive market forconsistent, outstanding performance over time, but we alsoconsider other factors, including differences in our positionresponsibilities compared to our peers, experience, retentionrisk, and internal equity.

order to align total compensation with stockholder interests.Performance pay represents the majority of our CEO’scompensation as a percentage of total compensation. Wecontinually review best practices in governance and executivecompensation. In observance of such best practices, KBR:

In consideration of these objectives, KBR provides pay that ishighly dependent on performance (both short and long-term) in

does not maintain employment agreements with the NEOs;●does not provide excise tax gross-ups;●has incentive plans that discourage undue risk and align●executive rewards with short and long-term companyperformance; and

requires executives to satisfy stock ownership requirements.●For the reasons discussed above, the Board of Directorsunanimously recommends that stockholders vote in favor of thefollowing resolution:

“RESOLVED, that the compensation paid to the Company’snamed executive officers, as disclosed pursuant to Item 402 ofRegulation S-K, including the Compensation Discussion andAnalysis, compensation tables and narrative discussion, ishereby APPROVED.”

While the resolution is non-binding, the Board of Directors valuesthe opinions that stockholders express in their votes and in anyadditional dialogue. It will consider the outcome of the vote andthose opinions when making future compensation decisions.


Part Four

Audit Matters

Audit Committee Report 82

Approved Principal Accountant Fees and Services 84Pre-Approval Policy 84

Proposal No. 3 - Ratify the Appointment of Independent Registered Public Accounting Firm 85


Audit Matters

Audit Committee Report

Audit Committee ReportKBR’s Audit Committee operates under a written charteradopted by the Board that outlines the responsibilities of, andpractices followed by, the Committee. A copy of the Charter isavailable on KBR’s website, www.kbr.com, by choosing “OurCompany” under the “About” menu, then selecting “CorporateGovernance” and “Board Committees.” We review andreassess the charter annually and recommend any changes tothe Board of Directors for approval. We met 10 times in 2018and this report summarizes the activities of the Committeeduring those meetings.

KBR’s management is responsible for preparing KBR’s financialstatements and the principal independent accountants areresponsible for auditing those financial statements. The AuditCommittee’s role is to provide oversight of management incarrying out management’s responsibility and to appoint,compensate, retain and oversee the work of the principalindependent accountants.

Primary Responsibilities and 2018 ActionsThe Audit Committee assists the Board in overseeing theaccounting and financial reporting process and integrity of thefinancial statements of the Company; the compliance by theCompany with legal and regulatory requirements; and theperformance of the internal audit function, internal accountingcontrols, disclosure controls and procedures, and internal controlover financial reporting. In 2018, in fulfilling theseresponsibilities, among other things, we:

Met with senior members of the Company’s financial●management team at each meeting;

Held separate private sessions, during regularly scheduled●meetings, with each of the Company’s Chief Financial Officer,Chief Accounting Officer, General Counsel, and Head ofInternal Audit, providing an opportunity for candid discussionsregarding financial management, legal, accounting, auditing,and internal controls matters;

Reviewed and discussed with management the Company’s●earnings releases and the financial results for each quarterlyperiod and for the fiscal year as set out in the Company’sForms 10-Q and Form 10-K prior to filing with the SEC;

Received periodic reports on management’s process to●assess the adequacy of the Company’s system of internalcontrol over financial reporting, the framework used to makethe assessment, and management’s conclusions on theeffectiveness of the Company’s internal control over financialreporting;

Met with the Chief Information Officer to review and discuss●cybersecurity initiatives, a review of data privacy and securitycontrols, and measures implemented to improve systems andprocesses;

Reviewed and discussed with senior management significant●risks and exposures identified by management and theCompany’s processes related to risk assessment andmanagement, including the Company’s enterprise riskmanagement process;

Reviewed and discussed with senior management, including●the Head of Internal Audit, prior period adjustments andsignificant changes in estimates of costs to complete certainengineering, procurement and constructions projects and theevaluation of the Company’s internal controls over financialreporting and the quality of the Company’s financial reporting;

Met with the General Counsel and Chief Compliance Officer to●receive status reports on compliance matters and to discussthe effectiveness of the Company’s compliance program;

Discussed with the Company’s financial management the●plans and procedures for implementation of FASB AccountingStandards Update No, 2016-02 Leases, and the anticipatedimpact of the new standard on the controls and financialstatements of the Company;

Reviewed and discussed with senior management major●financial risk exposures, including a review of the fundingvaluation and investment processes of the Company’s pensionplan in the UK, a review of tax planning, tax valuationallowances and certain tax positions, and periodic reviews ofthe financial covenants under the Company’s revolving creditagreement and liquidity positions and analysis; and

Reviewed the Company’s internal audit plan, received●individual audit reports, discussed with managementmeasures implemented in response to internal audits, andreviewed the performance of the Company’s internal auditfunction.

Oversight of Independent AuditorsIn addition to the responsibilities described above, the AuditCommittee oversees the audits of the Company’s financialstatements and the independence, qualifications, andperformance of the independent auditors. In fulfilling ouroversight role for the year ended December 31, 2018, under theAudit Committee’s charter, among other things, we reviewedand discussed with KPMG LLP, the Company’s independentauditors and principal independent accountants, as well as withsenior members of the Company’s financial management team,the overall audit scope and plan, the results of the external audit,and evaluations by KPMG LLP of the Company’s internalcontrols over financial reporting, the quality of the Company’sfinancial reporting, and the effectiveness of the Company’sdisclosure controls and procedures. KPMG LLP also reported tous on significant accounting judgments and estimates made bymanagement in preparing the financial statements as well astheir analysis and assessment of significant risks. We alsodiscussed with KPMG LLP the matters required to becommunicated pursuant to the standards promulgated by thePublic Company Accounting Oversight Board and the Securitiesand Exchange Commission.

We discussed with KPMG LLP their assessment of theirindependence, including with respect to the tax services providedby them, and received the written disclosures and letter requiredby the applicable requirements of the Public CompanyAccounting Oversight Board regarding the independentaccountant’s communications with us concerning independence.


Audit Matters

Audit Committee Report

2018 Audited Financial StatementsBased on our review of the audited financial statements,discussions with management and with KPMG LLP, and ourreview of KPMG LLP’s written disclosures and letter, werecommended to the Board of Directors that the auditedfinancial statements be included in KBR’s Annual Report onForm 10-K for the fiscal year ended December 31, 2018, for filingwith the SEC. Our recommendation considers our review of thatfirm’s qualifications as independent accountants for theCompany. Our review also included matters required to beconsidered under SEC rules on auditor independence, includingthe nature and extent of non-audit services. In our judgment thenature and extent of non-audit services performed by KPMG LLPduring the year did not impair the firm’s independence.

and performance of the audit team, and KPMG LLP’sindependence, the Committee concluded that it would be in thebest interests of KBR and its stockholders to retain KPMG LLPto serve as the independent registered public accounting firm toaudit the consolidated financial statements for KBR for 2019 andrecommend that such appointment be ratified by stockholders atthe 2019 annual meeting of the Company.

After discussions with management, considering KPMG LLP’shistorical and recent performance of KBR’s audit, the capabilities

Respectfully submitted,

The Audit Committee of Directors

Mark E. Baldwin, ChairmanLoren K. CarrollWendy M. MasielloAnn D. Pickard

March 20, 2019


Audit Matters

Approved Principal Accountant Fees and Services

Approved Principal Accountant Fees and ServicesThe following table presents the pre-approved fees for audit services rendered by KPMG for the audit of our annual financialstatements for the years ended December 31, 2018, and December 31, 2017, and fees billed or expected to be billed for audit-related,tax and all other services rendered by KPMG during those periods.

Thousands of dollars 2018 2017

Audit fees(1) $ 6,009 $ 5,654

Audit-related fees(2) 11 10

Tax fees(3) 1,362 260

All other fees — —

TOTAL $ 7,382 $ 5,924

Audit fees represent the pre-approved aggregate fees for professional services rendered by KPMG for the integrated audit of our annual financial(1)statements for the fiscal years ended December 31, 2018, and December 31, 2017. With respect to the audit fees in 2017 this amount reflects anadditional $400,000. This variance was noted as being still in discussion with KPMG and had not been approved and billed as of the date of lastyear's Proxy Statement. Audit fees also include the audits of many of our subsidiaries in regard to compliance with statutory requirements in foreigncountries, and review of registration statements.Audit-related fees primarily include professional services rendered by KPMG for special purpose audits of separate KBR entities primarily related to(2)jurisdictional licensing requirements.2018 tax fees consist of the aggregate fees for professional services rendered by KPMG for federal, state and international tax compliance for(3)$1,226,000 and advice for $136,000.

Pre-Approval PolicyThe Audit Committee is directly responsible for appointing,setting compensation for and overseeing the work of KPMG, ourprincipal independent registered public accounting firm. The AuditCommittee has established written pre-approval policies requiringapproval by the Audit Committee of all services to be provided byKPMG and all audit services provided by other independentaccountants. The policy provides that all audit, audit-related andtax services to be provided by KPMG will be described in awritten plan submitted to the Audit Committee annually forpre-approval. The Audit Committee, its Chairman or another AuditCommittee member designee must pre-approve any audit,audit-related or tax services to be provided by KPMG that werenot submitted for annual pre-approval if the fees to be paid forsuch services will exceed $150,000. All other services for fees inexcess of $50,000 must be specifically approved in the samemanner as audit, audit-related and tax services greater than$150,000. Any services provided by KPMG must be pre-approvedby the Audit Committee if the fees are $250,000 or greater.

The policy also provides that all audit services to be provided byindependent public accountants other than KPMG will bedescribed in writing and presented to the Audit Committee byour Chief Accounting Officer annually for pre-approval. Any auditservices not included in the annual pre-approved plan must beapproved in the same manner as unplanned audit, audit-relatedand tax services to be provided by KPMG.

As permitted by the SEC, to ensure prompt handling ofunexpected matters, our policy allows for the delegation of theAudit Committee’s pre-approval authority under the policy to theChairman or another member of the Audit Committeedesignated by the Audit Committee or the Chairman. Anypre-approval decisions by the Audit Committee Chairman orother Audit Committee designee will be reported to the AuditCommittee at the next regularly-scheduled meeting followingany such decisions.


Audit Matters

Proposal No. 3 - Ratify the Appointment of Independent Registered Public Accounting Firm

Ratify the Proposal No. 3 -Appointment of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors recommends that you vote FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm to audit the consolidated financial statements for KBR as of and for the year ending December 31, 2019. Properly dated and signed proxies, and proxies properly submitted over the Internet and by telephone, will be so voted unless stockholders specify otherwise.

has had any connection with KBR in the capacity of promoter,underwriter, voting trustee, director, officer or employee.

KPMG LLP has audited the financial statements of KBR and itspredecessor beginning with the year ended December 31, 2004.A resolution will be presented at the Annual Meeting ofStockholders to ratify the appointment by the Audit Committeeof the Board of Directors of that firm as independent registeredpublic accounting firm to audit the consolidated financialstatements of KBR as of and for the year endingDecember 31, 2019. The engagement of KPMG LLP was madeby the Audit Committee. KPMG LLP has advised that neither thefirm nor any member of the firm has any direct financial interestor any material indirect interest in KBR. Also, during at least thepast three years, neither the firm nor any member of the firm

Representatives of KPMG LLP are expected to be present at theAnnual Meeting of Stockholders, will have the opportunity tomake a statement if he or she desires to do so and will beavailable to respond to appropriate questions from stockholders.

As a matter of good corporate governance, the Audit Committeeof the Board of Directors submits the selection of theindependent registered public accounting firm, KPMG LLP, toour stockholders for ratification. The proposal to ratify theappointment of KPMG LLP will be approved if it receives theaffirmative vote of a majority of the shares of common stockpresent in person or represented by proxy at the Annual Meetingof Stockholders. If our stockholders do not ratify theappointment of KPMG LLP, the Audit Committee mayreconsider its selection of KPMG LLP as our independentregistered public accounting firm for the year endingDecember 31, 2019, but the Audit Committee may also elect toretain KPMG LLP. Even if the selection of KPMG LLP is ratified,the Audit Committee in its discretion may appoint a differentindependent registered public accounting firm at any time duringthe year if the Audit Committee determines that such changewould be appropriate.


Audit Matters


Part Five

Additional Information

Questions and Answers About Voting 88

Additional Information 90Stockholder Proposals for 2019 Annual Meeting and Director Nominations 90

Proxy Solicitation Costs 90

Other Matters 90

Additional Information Available 90


Audit Matters

Questions and Answers About Voting

Questions and Answers About VotingThe following are answers to common questions about voting KBR shares at the meeting. If your question is not addressed below orelsewhere in this proxy statement, please contact KBR’s Investor Relations Department at (713) 753-5082 or (866) 380-7721.

IF YOU PLAN TO ATTEND:

Attendance at the meeting is limited to stockholders as of close of business on the record date or their duly appointed proxy holders.No guests will be admitted. Admission will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the meetingwill begin promptly at 9:00 a.m. Each stockholder and proxy holder holding KBR shares in brokerage accounts is required to bring acopy of a brokerage statement, voting instruction form or legal proxy reflecting stock ownership as of the record date. Please note thatyou may be asked to present valid picture identification, such as a driver’s license or passport.

Who is Entitled to Vote?Holders of record at the close of business on March 22, 2019, which is the record date for the meeting, will be entitled to one vote pershare. Fractional shares will not be voted. On the record date, KBR had 141,448,558 shares of common stock, par value $0.001 pershare, outstanding.

Who is Soliciting My Proxy to Vote My Shares?KBR’s Board of Directors is soliciting your proxy, or your authorization for our representatives to vote your shares. Your proxy will beeffective for the May 15, 2019, meeting and at any adjournment or postponement of that meeting.

What Constitutes a Quorum?For business to be conducted at the meeting, a quorum constituting a majority of the shares of KBR common stock issued andoutstanding and entitled to vote must be in attendance or represented by proxy. Abstentions and broker non-votes (described below)will be counted for purposes of determining whether a quorum is present at the meeting. If a quorum is not present, the Chairman ofthe Board or a majority of stockholders present in person or represented by proxy and entitled to vote, have the power to adjourn theAnnual Meeting from time to time, without notice other than an announcement at the Annual Meeting, until a quorum is present.

How Do I Give Voting Instructions?As described on the enclosed proxy card, proxies may be submitted:

over the Internet,●by telephone, or●by mail.●

Votes submitted over the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on Tuesday, May 14, 2019.

Can I Change My Vote?A proxy may be revoked by a stockholder at any time before it is voted by:

giving notice of the revocation in writing to KBR’s Corporate Secretary at 601 Jefferson Street, Houston, Texas 77002;●submitting another valid proxy by mail, telephone, or over the Internet that is later dated and, if mailed, is properly signed; or●voting in person at the meeting.●

What are Voting Requirements to Elect the Directors and Approve Each of the Proposals?To be elected to the Board of Directors in an uncontested election, a candidate must receive a majority of votes cast (the number ofvotes cast “for” a candidate must exceed the number of votes cast “against” the candidate). An instruction to “abstain” with respect


Audit Matters

Questions and Answers About Voting

to any director means your shares will not be voted or counted in the total votes cast with respect to that director, although the sharesrepresented by such instruction will be counted for purposes of determining whether there is a quorum. To be elected to the Board ofDirectors in a contested election, the directors shall be elected by the vote of a plurality of the votes cast.

With respect to each matter other than the election of directors, adoption of proposals will require the affirmative vote of a majority ofthe shares of KBR’s common stock present in person or represented by proxy at the meeting and entitled to vote on the matter.

If My Shares are Held in “Street Name” By My Broker, How Will My Shares Be Voted?Shares held in street name which are not voted by a broker on a for which the broker does not have discretionary authority to vote,matter in the absence of instructions from the beneficial owner, however, those shares will not be counted for or against theknown as broker non-vote shares, will be counted as shares that matter unless you provide instructions to your broker. Your vote isare present and entitled to vote for purposes of determining the important, and we request that you vote your shares as promptlypresence of a quorum. In determining the outcome of any matter as possible by returning your instructions to your broker.

What Happens if I Abstain or Withhold My Vote on any Proposal?Abstentions are counted as present in determining whether the quorum requirement is satisfied. Abstentions from voting will not betaken into account in determining the outcome of the election of directors. With respect to each matter other than the election ofdirectors, abstentions will be included in the voting tally and will have the same effect as a vote against all other proposals.

How Does KBR Distribute Proxy Materials?To expedite delivery, reduce our costs and decrease the environmental impact of our proxy materials, we used “Notice and Access” inaccordance with an SEC rule that permits us to provide proxy materials to our stockholders over the Internet. By April 1, 2019, we sent aNotice of Internet Availability of Proxy Materials to certain of our stockholders containing instructions on how to access our proxy materialsonline. If you received a Notice, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you onhow to access and review all the important information contained in the proxy materials. The Notice also instructs you on how you maysubmit your proxy via the Internet. If you received a Notice and would like to receive a copy of our proxy materials, follow the instructionscontained in the Notice to request a copy electronically or in paper form. Stockholders who do not receive the Notice will continue toreceive either a paper or electronic copy of our proxy statement and Annual Report, which will be sent on or about April 1, 2019.

Does KBR Offer Electronic Delivery of Proxy Materials?Yes. KBR encourages you to reduce printing and mailing costs bysigning up for electronic delivery of KBR stockholdercommunications. With electronic delivery, you will receivedocuments such as the Annual Report and the proxy statement assoon as they are available, without waiting for them to arrive in themail. Electronic delivery also can help reduce the number of bulkydocuments in your personal files and eliminate duplicate mailings.

To sign up for electronic delivery, please follow the instructionson your proxy card to vote by Internet at www.proxyvote.comand, when prompted, indicate that you agree to receive or accessstockholder communications electronically in future years.

What is “Householding?”In accordance with notices that KBR sent to certain stockholders,KBR is sending only one copy of its meeting materials tostockholders who share the same address, unless they havenotified KBR that they want to continue receiving multiple copies.This practice, known as “householding,” is designed to reduceduplicate mailings and save significant printing and postage costs.

If you received a householded mailing this year and you wouldlike to have additional copies of the Annual Report and/or proxystatement mailed to you, or you would like to revoke yourconsent to the householding of documents, please submit yourrequest to 1-866-540-7095. You will begin to receive individualcopies within 30 days after your request.

Unfortunately, householding for bank and brokerage accounts islimited to accounts within the same bank or brokerage firm. Forexample, if you and your spouse share the same last name andaddress, and you and your spouse each have two accountscontaining KBR stock at two different brokerage firms, yourhousehold will receive two copies of the notice or meetingmaterials — one from each brokerage firm. To reduce thenumber of duplicate sets of the notice or meeting materials yourhousehold receives, you may wish to enroll some or all of youraccounts in our electronic delivery program. See “Does KBRoffer electronic delivery of proxy materials?”


Audit Matters



Stockholder Proposals for 2019 Annual Meeting and Director NominationsIn order for stockholder proposals to have been properlysubmitted for presentation at our Annual Meeting ofStockholders, we must have received notice of the proposalnot earlier than January 14, 2019, nor later thanFebruary 13, 2019 (the 120th and 90th days, respectively,prior to May 15, 2019, the intended date of the 2019Annual Meeting of Stockholders). Your proposal mustcomply with Article I, Section 9 of our Bylaws.

A nomination or proposal that does not comply with theabove procedures will be disregarded. Compliance withthe above procedures does not require KBR to include theproposed nominee or business in KBR’s proxy solicitationmaterials.

If you wish to present a proposal to be considered forinclusion in our proxy material for our Annual Meeting ofStockholders to be held in 2020, you must submit theproposal in writing to our Corporate Secretary at 601Jefferson Street, Suite 3400, Houston, Texas 77002, and wemust receive your proposal not later thanDecember 1, 2019 (the 120th day prior to April 1, 2020, theone-year anniversary of the date on which we estimatedthat we would send our materials for our 2019 AnnualMeeting of Stockholders). Proposals submitted for inclusionin our proxy materials must comply with Rule 14a-8 underthe Exchange Act.

Proxy Solicitation CostsThe proxies accompanying this proxy statement are being facsimile or other means of communication, if deemedsolicited by KBR. The cost of soliciting proxies will be paid appropriate. KBR will, upon request, reimburse banks,by KBR. We have retained D.F. King & Co. to aid in the brokers or other persons holding stock in their names or insolicitation of proxies. For these services, we will pay D.F. the names of their nominees for their reasonable expensesKing & Co. $8,500 and reimburse it for out-of-pocket in forwarding proxy materials to beneficial owners of KBRexpenses. Some executive officers and other employees of common stock.KBR also may solicit proxies personally, by telephone, mail,

Other MattersAs of the date of this proxy statement, we know of no business that will be presented at the 2019 Annual Meeting ofStockholders other than the matters described in this proxy statement. If any other matters should properly come before theAnnual Meeting of Stockholders for action by stockholders, it is intended that proxies in the accompanying form will bevoted on those matters in accordance with the judgment of the person or persons voting the proxies.

Additional Information AvailableKBR files an Annual Report on Form 10-K with the U.S. Securities and Exchange Commission. Stockholders may obtain acopy of this report (without exhibits), without charge, by writing to KBR’s Investor Relations Department at 601 JeffersonStreet, Suite 3400, Houston, Texas 77002.


Audit Matters

Additional Information Available

Forward Looking StatementThis proxy statement contains forward-looking statements actual results to differ materially from the forward-lookingregarding our plans, objectives, goals, strategies, future events, statements contained in this proxy statement. Additionalfuture financial performance and other information that is not information about potential risk factors that could affect ourhistorical. When used in this proxy statement, the words business and financial results is included in our most recently“estimates,” “expects,” “anticipates,” “projects,” “plans,” filed Form 10-K, any subsequent Form 10-Qs and 8-Ks, and any“intends,” “believes,” “forecasts” or future or conditional verbs other Securities and Exchange Commission Filings.such as “will,” “should,” “could,” or “may,” and variations ofsuch words or similar expressions are intended to identifyforward-looking statements. Such statements are based uponour current expectations and various assumptions, which aremade in good faith, and we believe there is a reasonable basisfor them. However, because forward-looking statements relateto the future, they are subject to inherent risks, uncertainties andother factors that are difficult to predict and which could cause

We caution you not to place undue reliance on theforward-looking statements included in this proxystatement, which speak only as of the date hereof. Wedisclaim any intent or obligation, except as required by law,to revise or update this information to reflect newinformation or future events or circumstances.

Non-GAAP Reconciliation: EBITDA and Adjusted EPS EBITDA is defined as earnings before interest income / expense, income taxes, other non-operating income / expense, depreciationand amortization.

($ in millions) Fiscal Year 2017 Fiscal Year 2018

Net income attributable to KBR $ 434 $ 281

Add Back:

Interest expense 21 66

Provision (benefit) for income taxes (193) 88

Other non-operating expense (4) 6

Halliburton tax sharing agreement 14 0

Depreciation & amortization 48 63

EBITDA $ 320 $ 504

Fiscal Year 2017 Fiscal Year 2018

EPS (Diluted) $ 3.06 $ 1.99

Add Back:

Legacy legal fees 0.10 0.06

Non-cash tax benefit for 2017 Tax Reform (0.13) 0.00

Non-cash tax valuation allowance reduction (1.58) 0.00

Impairment of shareholder loan receivable 0.04 0.00

Acquisition & Integration related expenses 0.00 0.04

Amortization related to Aspire Defence acquisition 0.00 0.06

Non-cash imputed interest on conversion option 0.00 0.01

Aspire Defence gain on consolidation 0.00 (0.63)

ADJUSTED EPS $ 1.49 $ 1.53

PEMEX settlement gain (0.18)

$ 1.31

KBR 2019 Proxy Statement · 4 2019 Proxy Statement U.S. Navy F-35C, CF-01, ﬂying over Ocean...

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